First time with Estimated Tax Vouchers

[retiredrunner]

Hello Turbotax community. Thanks for your help in advance.

I received the estimated tax vouchers - first time I'm ever seeing them. I did have a huge spike in my 2021 income because I was a student the previous year in 2020 + had an annual bonus causing my income to increase significantly (I was taxed on every pay check). I sold stocks as well but only ~$4k. According to my refund statement, I owe a small amount of federal and state taxes this year. 

How do I determine if I actually need to pay this for 2022? I've seen the posts regarding owing less than $1,000/calculating the 90% rule but confused how to go about this. 

[bluedeb · Accepted solution]

You're not required to make estimated tax payments; Turbotax is  just suggesting it based on the info in your return. If you feel they're not needed for next year's taxes, you can shred them.  

To determine whether you need to make quarterly estimates, answer these questions:

1. Do you expect to owe less than $1,000 in taxes for the tax year after subtracting your federal income tax withholding from the total amount of tax you expect to owe this year? If so, you're safe—you don't need to make estimated tax payments.
2. Do you expect your federal income tax withholding (plus any estimated taxes paid on time) to amount to at least 90 percent of the total tax that you will owe for this tax year? If so, then you're in the clear, and you don't need to make estimated tax payments.
3. Do you expect that your income tax withholding will be at least 100 percent of the total tax on your previous year's return? Or, if your adjusted gross income (Form 1040, line 8b) on your tax return was over $150,000 ($75,000 if you're married and file separately), do you expect that your income tax withholding will be at least 110 percent of the total tax you owed for the previous year? If so, then you're not required to make estimated tax payments.

If you answered "no" to all of these questions, you must make estimated tax payments using Form 1040-ES. To avoid a penalty, your total tax payments (estimated taxes plus withholding) during the year must satisfy one of the requirements we just covered.

Estimated Taxes: How to Determine What to Pay and When

https://turbotax.intuit.com/tax-tips/small-business-taxes/estimated-taxes-how-to-determine-what-to-p...

[retiredrunner]

Thank you, so after looking at my taxes again. Does it matter is the net I am gaining a refund? I owe money federally, and to one state. And am receiving a refund in another state. The positive amount is more than $1000 and net net is $13. 

[bluedeb]

Estimated taxes are paid in 2022 for next year's taxes (2022).  If you are not going to owe more in 2022, then you do not need to make estimated tax payments. 

When do I need to file Form 1040-ES?

Quarterly tax payments are due on the following days:

• April 15 of the current year for January-March estimated earnings
• June 15 for April-June estimated earnings
• September 15 for July-September estimated earnings
• January 15 of the following tax year for October-December earnings, although this payment requirement is waived if you file your federal tax return by February 1 and pay the entire balance due

[AmyC]

The estimated payments are recommended by the program anytime you owe $1,000 or more to the federal. The IRS does not want you owing more than $1,000. If you owe $5,000 or more, the penalties are much stiffer. If you did not have enough withheld this past year, you should have more withheld this year. If you cannot have more withheld, then you should make estimated payments.

The federal and state are not mixed together. Each one is a separate liability. States have different thresholds for liability.