Estimated taxes

[pfenton42]

In 2024, we made about $250k and paid estimated taxes for that year.  Now retired, we'll have significantlyh less income in 2025.  How do I figure estimated taxes, assuming I even owe any for 2024.  

[AmyC]

Options:

• Your tax program will let you back in throughout the year and you can go through the estimated tax section. Select "add a state" to get back in after filing.
• Use the TurboTax Tax Calculator - Tax Refund & Return Estimator 2024-2025
• Use the IRS About Form 1040-ES, Estimated Tax for Individuals

[nathanau]

It will depend a bit on from where and when your income comes from but in general, the same way you have calculated estimated taxes before.  If you are relying on retirement accounts such as IRAs for example, you can usually just let the brokerage or bank withhold taxes from your IRA distribution rather than making quarterly estimated tax payments.  For other types of income, each quarter, you should estimate how much of it will be taxable to check if your distributions and other income for that quarter pushes you into a higher bracket and make an estimated tax payment for that quarter if you need to  "even up".  One way that I do that  is to create a new return for estimating purposes using last year's version of turbo tax and enter the income and taxes paid year to date  into the appropriate income section section (1099-R for retirement income).  Use last year's tax return to estimate deductions or simply assume a standard deduction. 

Note that TurboTax also has a tool call Taxcaster.  I have never used it but it may help give you an idea whether you are withholding enough or need to add more in a quarterly estimate. 

[VolvoGirl]

If you have the Desktop program you can switch to Forms mode and fill them out there. But what I do is first fill out the What-If Worksheet to help estimate my income for 2025. To find the What-If Worksheet. Go to Forms Mode, click Forms in the upper right or on the left for Mac. Then click Open Forms box in the top of the column on the left. Open the US listing of forms and towards the bottom find the What-if worksheet. It's right under Estimated Taxes.

Or try…Go into Forms View. Once there, at the top of the left column, click on the icon for "Open Form". A popup window will appear. In the text line, type the word "what" without quotes. You should see "what-if worksheet" appear as a selection choice. Double-click it to launch the form.

I copy the 2024 amounts in column 1 to column 2 and override them with my new amounts. Click the box at the top of the column to use 2025 tax rates.

Then when you get your income, payments and taxes calculated go to the Est Tax Options worksheet and play with the options.

I update these sheets each quarter as I know how much my income is so far like interest and put in estimated totals for the year.