I had a large tax liability in 2021 due to capital gains which I do not expect in 2022. It's causing ridiculous estimated tax payments in 2022

[Breitsd]

I had a lot of capital gains income in 2021 which I do not expect in 2022.  I made my estimated tax payments in 2021 as the income was realized.  I'm expecting a sizeable refund due to overpayment of taxes in 2021.   TurboTax is telling me that I now need to pay 110% of the 2021 tax bill in 2022, and it specified a huge amount of estimated taxes.  Again, I do not expect to earn the same level of capital gains in 2022.  If I pay the specified estimated taxes, they would all be returned at the end of 2022.  This seems nonsensical.  Do I have any recourse to pay what I actually expect to owe rather than the 110% figure specified by the IRS?  Is it a law, or is it a guideline?

[VolvoGirl]

The 1040ES are estimates for next year. The 1040ES quarterly estimated tax payments DO NOT get sent to the IRS or state with your return. They are optional to pay. Turbo Tax is very conservative and doesn't want you to owe too much next year. They might have printed out if you got a one time large income this year. Like if you took a IRA or 401K distribution. You can ignore them.

[Mike9241]

payment of estimated taxes is voluntary.

since you are expecting your 2022 income to be down the safe harbor for avoiding penalties is you need timely estimate payments and withholding equal to 90% of your 2022 tax (the tax rules if you have a state income tax will be different)

if you had the desktop software I would suggest once you complete the 2021 return and e-file it  (this is to prevent efiling the wrong return)  you open and save the file as say "2022 estimate" then you can adjust the figures any way you want to see what's needed for 2022. I would give myself some cushion

for online you can use the 2021 capital gain worksheet, print it out, and revise the numbers to match what's expected in 2022. double-check that your calculations are correct.  then bump it up a little to give yourself some cushion.

[fanfare]

@Breitsd 

see this post

https://ttlc.intuit.com/community/taxes/discussion/re-can-i-get-off-the-estimated-tax-rollercoaster/...

[IreesaPThompson]

During 2021 I had a long term capital gain due to stocks sold shown on Schedule D .  This was a one time transaction that I do not intend to repeat in 2022.  My tax payment due for 2021is $8378.  My estimated payments for 2022 per quarter is $2617.  My taxable income for 2020 was $38364, and I paid $522 quarterly.  This is the normal range of my taxable income and Estimated payments.

Please make the necessary adjustments to my Estimated Payments .  

[VolvoGirl]

Only you can change your return or estimates.

The 1040ES quarterly estimated tax payments DO NOT get sent to the IRS or state with your return. They are optional to pay. Turbo Tax is very conservative and doesn't want you to owe too much next year. They might have printed out if you got a one time large income this year. Like if you took a IRA or 401K distribution. You can ignore them. You might want to adjust your withholding at work so you won't owe too much next year.

You can change them or cross out the amount and write in the amount you want to pay.

To prepare estimates for next year you start with your current return, but be careful not to change anything.  If you can't get back into your return, Click on Add a State to let you back into your retun.

You can just type W4 in the search box at the top of your return , click on Find. Then Click on Jump To and it will take you to the estimated tax payments section. Say NO to changing your W-4 and the next screen will start the estimated taxes section.

Or Go to….

Federal Taxes or Personal (Deskop H&B)

Other Tax Situations

Other Tax Forms

Form W-4 and Estimated Taxes - Click the Start or Update button

The 1040ES quarterly estimates are due April 18, June 15, Sept 15 and Jan 17, 2023.  Your state will also have their own estimate forms.

Or you can pay directly on the IRS website https://www.irs.gov/payments

Be sure to pick the right kind of payment and year.....2022 Estimate

Here are the blank Estimates and instructions…..

http://www.irs.gov/pub/irs-pdf/f1040es.pdf