turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
Announcements
Close icon
Do you have a TurboTax Online account?

We'll help you get started or pick up where you left off.

jimcmorr
New Member

I was disappointed that I have to pay a penalty for not making 1/4ly pymts and that turbotax didn't tell me how to avoid this in the future. Is turbotax able to do this?

I started computer consulting two years ago. I've been escrowing my own tax withholding and made my tax payment for 2018 in February but turbotax said i would owe a penalty.  Turbotax didn't indicate how this could be avoided in the future.  For that matter, i consulted a CPA about my taxes just to have a level of comfort and they also did not indicate i would have to make quarterly payments.  I received my penalty bill in the mail today and I would like to know how to avoid this situation in the future.

Connect with an expert
x
Do you have an Intuit account?

Do you have an Intuit account?

You'll need to sign in or create an account to connect with an expert.

1 Reply
Carl
Level 15

I was disappointed that I have to pay a penalty for not making 1/4ly pymts and that turbotax didn't tell me how to avoid this in the future. Is turbotax able to do this?

It's simple really. I've been self-employed as a computer consultant for about 15 years or so now. What I do each quarter is send the IRS "at least" 20% of my gross income each quarter. Now the IRS has these worksheets you can use to figure your quarterly taxes each quarter. But in my opinion (and we know what opinions are like) it's a waste of my time. I just make my quarterly tax payments online each quarter at http://www.irs.gov/payments, print the receipt, file it for tax time and that's it.

Now if your gross income from all sources (not just your business income) is expected to exceed $160K for the year, then you'll want to send the IRS at least 25% of your gross business earnings each quarter.

Keep in mind that I'm talking about sending in a percentage of your *gross* business income, before you consider "any" business deductions at all.

With this method I find that at tax filing time I'm easily within $1000 either side of my total tax liability. An underpayment penalty is assessed if at tax filing time you owe the IRS more than 10% of your total tax liability, or more than $1000 - whichever is HIGHER.

For me, in the few years I've actually owed the IRS more, the most I ever owed in one of those years was around $475. In the years I get a refund, that refund is always less than $1000. So this works just fine for me.

However, if you want to do it the long way, the worksheets and instructions are at https://www.irs.gov/pub/irs-pdf/f1040es.pdf

Finally just so you know, I'm using the CD/Desktop version of the program. When I print my tax return after e-filing it, pages 3 thru 6 of the printout are the 1040-ES forms for the next tax year's (2019) quarterly payments. I don't have a choice on that. If (and as far as I can tell "only" "If") I owed the IRS taxes in the currently filed tax year (which now is 2018)  then the program automatically generates the 1040-ES forms for each quarter.

Also, be aware of the quarterly tax payment deadlines too. For 2019 they are:

1st payment . . . . . . . . . . . . . . . . . April 15, 2019
2nd payment . . . . . . . . . . . . . . . . June 17, 2019
3rd payment . . . . . . . . . . . . . . . . .Sept. 16, 2019
4th payment . . . . . . . . . . . . . . . . .Jan. 15, 2020

For the "final" finally, if your state taxes personal income, then you will also need to send your state quarterly tax payments. Since states tax at a different rate than the IRS does, I suggest you send your state each quarter a percentage of your business income that matches the state's rate of taxation, and you'll be fine with that.


message box icon

Get more help

Ask questions and learn more about your taxes and finances.

Post your Question
Manage cookies