How does TurboTax make 1040-ES vouchers that account for the majority of my income in Q1?

[JayTaxes]

How does TurboTax make 1040-ES vouchers that account for the majority of my income in Q1? It appears I need Form 2210 Schedule AI for 2025? (No withholding to adjust.)

An example to illustrate my case. 2024 AGI $160,000. 2024 federal tax $40,000. Safe harbor estimated federal tax to pay in 2025 is 110% of $40,000 or $44,000.
This would normally mean $11,000 each quarter.
However, assume 2025 AGI is also $160,000 but $150,000 of it is earned in Q1 2025 as a capital gain.
Can the 2025 1040-ES for each quarter still be $11,000? Or does the Q1 1040-ES need to be something like $34,000 with Q2, Q3, Q4 each being $2,000. (Or similar Q1 weighted.)
If the larger Q1 is required, how do I have TurboTax Desktop calculate and print the unequal 1040-ES vouchers?

[DianeW777]

The estimated payment should reflect the income earned in each period when it is being  paid by the individual as opposed to being withheld. The first quarter should reflect the tax for that period. In your case, the full amount calculated for quarter 1 should be paid by April 15th. TurboTax will provide vouchers with equal payments for each estimated payment period. You can manually change the amount needed to make your payment after printing. You can also use the federal 2025 Form 1040-ES to fill out the .pdf for printing.

The IRS system is 'pay as you go'. This means when you make money, they want the tax dollars. Withholding is treated differently and considered to be paid equally throughout the year regardless of when it actually occurred. On the other hand our individual payments are counted when they are paid.

[JayTaxes]

Thank you for the detailed answer. Given that there I will have no withholding at all, I now understand that the estimate tax due is to be paid for the quarter income is earned. Thus the majority of my estimated 2025 payment will need to be in Q1.

What I don't see in your answer is something clear as to whether there is a way to enter into TurboTax Desktop someplace my income for each quarter and have TurboTax determine the estimated tax payment due for each quarter. (I'm not worried about the actual 1099-ES vouchers as I'll just go on IRS.gov and make my payments myself as I always do.)

I understand that I can use a IRS form myself manually to figure the portion of my 110% of my 2024 tax for each quarter, but can TurboTax do it with me entering my estimated income per quarter now?

[baldietax · Accepted solution]

As long as you pay the 110% of your 2024 taxes in equal timely installments then you will have met your safe harbor requirements for 2025 regardless of what you do in 2025, it doesn't matter how much or in which quarter these events occur, whether it's some large cap gain event or Roth conversion.  IRS assumes your taxable income accrued evenly throughout the year, so as long as you pay the ES installments evenly and on time, no Form 2210 AI should be needed when you file for 2025 (which can be a time consuming calculation).  Check your state also, should be similar provisions.

If you do need to make uneven payments for some reason don't bother with TT just print blank from IRS/state websites.  Or pay electronically through EFTPS for IRS and equivalent for state if they have one, no voucher is required.  But if you want to, in desktop under Forms mode there is a form "Est Tax Options" where you can change the vouchers (not sure equivalent in TT Online).

See FAQs on ES:

https://www.irs.gov/faqs/estimated-tax

Not a CPA/Expert but this is my understanding having gone through 2210 AI for 2024 and intending to avoid it for 2025 by paying ES based on 2024.  You can also test this out in TT 2024 also with a dummy return etc.

[JayTaxes]

@baldietax I think your answer is in direct opposition to the answer from @DianeW777  who says your answer applies to withholding but not when paying estimated payments myself.

I too would think that paying the safe harbor amount on time in equal quarterly amounts would be a true full safe harbor, but @DianeW777  answer says that is not then case.

(I'm not worried about actual 1040-ES vouchers themselves or how to pay. That is the easy part. It is knowing the portion for each quarter that is the hard part/question.)

Thanks for the info! Now which is the correct answer?

[DianeW777]

As baldietax indicated and was omitted in my post: Please keep in mind that you can pay at least as much as the tax liability for 2024 (or 110% of that amount depending on your income) to eliminate underpayment penalty as long as the payments are paid equally throughout the year. In this scenario the IRS will not look at the current year tax liability but the payments and tax liability for 2024.

Quarterly taxes are due each period. The information below should help you determine the correct amount to pay each period if you want to pay enough to closely cover your tax liability for 2025.

• When are quarterly estimated tax payments due?  (IRS page of FAQs included earlier)
  • For estimated tax purposes, the year is divided into four payment periods. Each period has a specific payment due date. If you don't pay enough tax by the due date of each payment period, you may be charged a penalty even if you're due a refund when you file your income tax return at the end of the year.
• Income is split into periods of time to determine the amount to pay and reduced by deductions (itemized or standard) and the tax is reduced by withholding, credits (if applicable). Also, if you have capital gain income the rate is a maximum of 20%, but could be lower depending on your other income.
  • Jan - Mar | payment due date Apr 15th
  • Jan - May | payment due date Jun 16th
  • Jan - Aug | payment due date Sep 15th
  • Jan - Dec | payment due date Jan 15th
• The worksheet included with the 1040-ES can be useful as well. 
• Instructions Form 2210 - include annualized income details beginning on page 8 and includes the 'Qualified Dividends and Capital Gain Tax Worksheet'

@JayTaxes