When you did 2020 did Turbo Tax print out 1040ES vouchers for 2021? They were just an estimate. You probably needed to go though that section and enter what income you thought you would get in 2021 and recalculate them.
Did you pay the estimates on time? When you did 2021 did it give you a penalty on 1040 line 38? You could have filled out form 2210 to eliminate or reduce the penalty. Don't know how you can now since online has closed. Try filing out form 2210 by hand, it can be tricky
https://www.irs.gov/pub/irs-pdf/f2210.pdf
The estimated payments the program puts out is ONLY to keep you from having an underpayment penalty if you pay the estimates timely, file the return timely AND if you pay any balance due on the return by the original filing deadline (not any extensions). Sending in the estimates will not guarantee you will not owe on the return ... it is only to keep you from having underpayment penalties.
The IRS can access an underpayment penalty + interest, a failure to file penalty + interest and a failure to pay penalty + interest. The TT system only helps with the first penalty and will compute an estimate underpayment penalty on the return based on your entries of any payments you made and the dates you made the payments.
Turbotax does not "calculate" your 2021 estimated tax payments. That calculation is something only you can do because only you know what your 2021 income will be. You are responsible for calculating your own estimated payments and making them on time.
If you underpaid your 2020 taxes, Turbotax may print out estimated tax payment vouchers for 2021. Those vouchers are based only on a snapshot of your 2020 income and other payments, and don't take into account changes in your circumstances that might change in 2021, such as changes in income, dependents, or other credits and deductions. You are not required to use the vouchers at all and they are not part of the accuracy guarantee, since your 2021 taxes can't be calculated from your 2020 income if your situation changes.
https://ttlc.intuit.com/replies/3301588
PAYING ESTIMATES
For SE self employment tax - if you have a net profit (after expenses) of $400 or more you will pay 15.3% for 2022 SE Tax on 92.35% of your net profit in addition to your regular income tax on it. So if you have other income like W2 income your extra business income might put you into a higher tax bracket.
You must make quarterly estimated tax payments for the current tax year (or next year) if both of the following apply:
- 1. You expect to owe at least $1,000 in tax for the current tax year, after subtracting your withholding and credits.
- 2. You expect your withholding and credits to be less than the smaller of:
90% of the tax to be shown on your current year’s tax return, or
100% of the tax shown on your prior year’s tax return. (Your prior year tax return must cover all 12 months.)
https://ttlc.intuit.com/community/tax-payments/help/how-do-i-make-estimated-tax-payments/00/25875
https://ttlc.intuit.com/community/tax-payments/help/when-are-estimated-taxes-due/00/25857
Once IRS applies a penalty you can dispute in writing, but without an alternative calculation, like Form 2210-AI , expect to not succeed.
@fanfare wrote:
Once IRS applies a penalty you can dispute in writing, but without an alternative calculation, like Form 2210-AI , expect to not succeed.
Taxpayers who have never paid a penalty before can apply for a one-time waiver, there are also waivers for cause. (This is different from requesting a recalculation.). Note that interest can't be waived.
https://www.irs.gov/payments/penalty-relief-due-to-first-time-abate-or-other-administrative-waiver
There are only limited circumstances (extremely limited) where the penalty for failure to pay estimated taxes will be reduced or eliminated.
See https://www.irs.gov/payments/underpayment-of-estimated-tax-by-individuals-penalty