How is 2020 TT calculating 2021 Estimated Taxes? Seems Wrong

[drennman]

Is there a problem with the 2020 TT calculation for 2021 Estimated Tax Payments?  

Using the Estimated Tax Payment Options worksheet, I select the 4th box: 100/110% of 2020 tax.  TT calculates an amount that is neither 100/110% of 1040 line 24 Total Tax.  In fact it’s an amount that doesn’t fit any percent of line 24.

Looking back at 2019, I find that using the same worksheet and selecting the same option, TT does calculate correctly the 100/110% of 1040 line 16 Total Tax.  

How is 2020 TT calculating the Estimated Tax Payment amount?  I know I can override this number but usually overriding a TT calculated amount is not a good thing to do.  

I have installed the latest TT update so that’s not an issue.  

Anyone have an understanding of this or seeing the same problem?  (I’d advise you to check because I wouldn’t have normally and wouldn’t have seen it was wrong until filing 2021 and probably an IRS penalty for underpaying.)

[MarilynG1]

Your Estimated Tax may be calculated from Form 1040, Line 16 minus Line 17.

The amounts that TurboTax prints on the four 1040-ES forms are just estimates - you can change the dollar amounts on any or all of them when you pay,

If you look at the  instructions for the 1040-ES, you will see all sorts of calculations for determining your annual estimated tax and your quarterly estimated tax.

If you had extra income in 2020 (or have irregular amounts of self-employment income) you can Annualize Your Income in the Underpayment Penalty section. 

Click this link for more info on Calculating Estimated Taxes.

[drennman]

Thanks for answering!

Working through all the possibilities it looks like TT is calculating box 4 100/110% of 2020 Taxes on the Estimated Tax Payment Options worksheet using 1040 Line 24 Total Tax minus 1040 Line 30 Recovery Rebate Credit (and any other credits that would be totaled on Line 32).  So the TT 2021 1040 ES calculated amount appears correct.  

[Daddude]

I have the same question. The calculation seems wrong. TT is reducing my SE tax by the amount I'm allowed to defer (but have chosen not to). It then adds that to regular taxes after credits and is calling that 100% of my 2020 taxes. But actually, it is about $8000 low vs. the total tax shown on 1040 line 24.

TT reported the correct 2020 total tax number on the "Your estimated tax bill for 2021" screen, then 3 screens later on the "Which method?" screen, it tells me 100% of my actual 2020 taxes is $8000 lower than it actually is. 

This is the kind of thing I expect TT to protect me from. I was logged into EFTPS to make my payments when I realized it just didn't seem like the right amount. Sure enough, it's $2000 per payment low. Please take a look at this and fix it please. 

[MarilynG1]

@Daddude Take your Line 24 Total Tax and subtract any Line 30 Amount (Recovery Rebate Credit) and any other credits totalled on Line 32  to see if this amount is what your Estimated Payments are calculated on.

Remember that you don't have to make Estimated Payments in the amount printed on your vouchers.

Click this link for more info on Estimated Payments. 

Since we can't see your tax return in this forum, you can request Phone Support or an Offline Review if you want more help.

[Daddude]

Thanks for the quick response. Line 32 is blank on my return, so there are no adjustments to the total tax on line 24. 
Working backwards on the TT forms, the wrong number is on the Est Tax Options worksheet as 100% of my 2020 taxes. Following the data source for that, it takes me to "Carryover Worksheet Line 6 (2nd col)". The data source for that is "Form 2210 Line 4" where it is listed as my current year tax. That number comes from lines 1 & 2 on that form. Line 1 is my correct tax after credits. Line 2 is only part of my self-employment tax. The data source for line 2 is Sch SE-T line 12 which lists my full self-employment tax. 
So I have no idea where the incorrect number came from. 

I've used the correct number from 1040 line 24 (minus 0 line 32 credits) as my 100% of 2020 number to calculate my estimated tax payments, so I don't need this fixed for me personally. But TT could be leading others astray so they are underpaying their estimated taxes. I nearly underpaid mine by $8000 based on what TT shows as my 100% option. 

[timbothwell]

From your first answer:

“Your Estimated Tax may be calculated from Form 1040, Line 16 minus Line 17.”

From your second answer:

“Take your Line 24 Total Tax and subtract any Line 30 Amount (Recovery Rebate Credit) and any other credits totalled on Line 32  to see if this amount is what your Estimated Payments are calculated on.”

In my case, lines 16, 18 & 22 are all the same, no entries on lines 17, 19, 20, or 21 to add or subtract. I do have an entry on line 23 that adds to a slightly higher total tax on line 24. No entries on lines 25 or 27 thru 32.

On the Estimated Taxes and Form W-4 Worksheet it states 110% of your 2020 actual tax. The estimate of total payments you will need to make for 2021 at the bottom of the form, the figure is slightly higher than 110% of line 16 by $37, but at 110% of line 24, it’s low by $185.

What am I missing in understanding how turbotax calculated the figure at the bottom and should I add $185 to the 1040-ES payment in January?