Newbie and Quarterly Estimated Taxes for 2023

[sail4you]

I am self-employed & file Schedule C as a sole proprietor.  I have never used Turbotax before and purchased TurboTax Desktop Home & Business in order to do my 2023 taxes. More specifically, I want to calculate my 2023 quarterly estimated taxes & pre-plan for 2023 taxes. (I've already filed my 2022 taxes through a CPA). My questions are:

1. After downloading TurboTax I realized that I purchased "TurboTax 2022". Can Turbotax 2022 calculate 2023 quarterly estimated tax payments?

2. More specifically, I read that TurboTax will calculate 2023 quarterly taxes based on 2022 tax data. I did not plan to enter any 2022 data since my CPA already finished my 2022 taxes plus I have switched my business structure from a solo S-Corp to a sole proprietor beginning 1/1/2023. Therefore even if enter the 2022 data, TurboTax will estimate taxes based on an old business/tax structure that is no longer valid. 

3. Do I have to purchase the 2023 version of Turbotax as well or can I replace the 2022 version with 2023, given the situation above and the fact that my goal is to calculate 2023 quarterly estimated taxes and eventually have TurboTax do my 2023 tax return instead of the CPA? (I didn't see a purchase option to specify a particular tax year version.) 

Any help is appreciated. Thanks!

[DianeW777 · Accepted solution]

1. Yes, TurboTax can help you calculate your 2023 estimated taxes but you would still need to provide information since the Schedule C (sole proprietor) is not included in your 2022 tax return.
2. Yes, that is correct. I will provide some tips to help you estimate your tax below.
3. I would suggest returning your copy of TurboTax 2022 if possible.  You will need to purchase 2023 when it becomes available next year, but you have chosen a good product for your self employment.  If purchased directly from the TurboTax site you can contact us here: Product Contact Information

Estimated taxes are due April 18th, June 15th, September 15th, 2023  and January 15th, 2024.

How do you go about estimating your taxes for 2023:  First, you must track your expenses as well as your self employment income because yourself employment tax will be on the net profit.  

For self-employment net profit keep in mind that there are two parts to the tax, self employment tax and personal income tax.  

1. Calculate your net profit from your self employment (income less expense) for each of the following periods:
   1. Jan - Mar estimated tax payment due April 18th
   2. Jan - May estimated tax payment due June 15th
   3. Jan - Aug estimated tax payment due September 15th
   4. Jan - Dec estimated tax payment due January 15th, 2024
2. Calculate Self-employment tax (net profit x .9235 x .153 = SE tax) - same periods 
3. Personal Income tax (based on the rate at which your combined taxable income from all sources falls) - 
   1. Tax rates for 2023 - see page 7 of Form 1040-ES Instructions.
      1. Depends on filing status, taxable income amount from all sources (for the entire year) and anticipated itemized deductions if applicable or the standard deduction
         1. Use your 2022 tax return to see what the taxable income was without regard to your S-Corp income. If you can assume your other income and any federal tax withholding will be similar in 2023 you can ignore this step.  
            • 1040 Line 15 minus Schedule 1, Line 3 = Taxable income for 2022 plus the amount calculated in step 1 above.
      2. If you do not need to account for the other income on your return (see underline above) then you can just check your personal income tax rate for 2023 using 3.1. above.
   2. Once you have the combined amount for each period you can enter the amount on your Form 1040-ES and make your payment or pay online.
      1. IRS Make a Payment

The Instructions and payment coupons are included at the link above for Form 1040-ES.

[sail4you]

Thanks for the fast, thorough reply! I just want to clarify my understanding of answer #3:

Is it correct to say that I will have to calculate my 2023 quarterly estimated tax payments myself, manually instead tax software? (Regardless, I plan to use the "Annualized Installment Method" because my income will be very erratic throughout the year.)

Also, I want to clarify that the TurboTax version for tax year 2023 is not available for purchase until calendar year 2024? 

Thanks again

[LindaS5247]

If your income is going to be erratic it would be best to calculate your 20323 quarterly estimated payments yourself.  It will be more accurate.

Click here for more information regarding estimated taxes from TurboTax.

Click here for common questions about estimated taxes from TurboTax.

Click here for information about estimated taxes by the IRS.

TurboTax for 2023 is set to launch in December.

[BillyCrash]

My related question is I have estimated 2023 tax payments as calculated by Turbotax 2022, however in June 2023 I now have a large capital gain from real estate sale (second home).  What is the best way of calculating how I should adjust my 2023 estimated tax payments for the remainder of the year?  Do I estimate the capital gain from the sale and divide by 2 since there are two quarterly 2023 payments remaining for the year?  Some other method?  Thanks.

[Critter-3]

This is my mini version of  a tutorial  that should be in the downloaded program: 

 

What is Forms Mode?

Forms Mode lets you view and make changes to your tax forms "behind the scenes."

If you're adventurous, you can even prepare your return in Forms Mode, but we don't recommend it. You may miss obscure credits and deductions you qualify for, and you may forget to report things that will come back and haunt you later.

Forms Mode is exclusively available in the TurboTax CD/Download software. It is not available in TurboTax Online.

Related Information:

• Why would I use Forms Mode?
• How do I switch to Forms Mode in the TurboTax for Windows software?
• How do I switch to Forms Mode in the TurboTax for Mac software?
• What is-the-meaning-of-all-the-different-colors-in-forms-mode
• How to delete a form

If you want to play around with different figures and tax scenarios without affecting your original return you can ….

• >>>In the TurboTax CD/Download software by creating a test copy: 
• 1.  Open your return in TurboTax. 
• 2.  From the File menu, choose Save As. 
• 3.  Give the copy a new name to distinguish it from the original (for example, by adding "Test" or "Example" to the file name). 
• 4. Click  Save. You are now safely working in the test copy and anything you do here will not affect the original. 
•  https://ttlc.intuit.com/questions/1900642-how-to-make-a-test-copy-of-your-return

• >>  use the WHAT IF tool: 
• - Click Forms Icon (upper right of screen) or Ctrl 2 (forms view) 
• - Click on the Open Form Icon 
• - In the “Type a form name.” area type What-If (with the dash), click on the name of the worksheet - click on Open Form 
• - You will see the worksheet on the right side of the screen; enter the information right into the form 
• - To get back to interview mode - click on the Step-by-Step Icon (upper right of screen) or Ctrl 1

Once you have filed successfully … you can shut off the auto updater function and then save the return &  .taxfile.

For Windows, up in the top menu, you  can set the  "Updater Preferences" to "Always Ask" or more commonly set to "I don't have an internet connection"  (even if you do), and then you are not forced to update....and can manually force an update when you choose to do so.   And then you can open the file(s) at any time with no forced upgrade.

But that's the Windows software.....not a MAC. For a MAC you cannot turn off the auto updater  HOWEVER  you can simply disconnect from the internet before opening the tax return.

It's always a good idea to make a backup copy of your tax data file, in case your original gets lost or corrupted. Here's how:

1. From the File menu in the upper-left corner of TurboTax, choose Save As (Windows) or Save (Mac).
2. Browse to where you want to save your backup.
   • Tip: If you're saving to a portable device, save it to your computer first to prevent data corruption. Then, after completing Step 4, copy or move the backup file to your device.
3. In the File name field, enter a name that will distinguish it from the original tax file (for example, add "Backup" or "Copy" to the file name)
4. Click Save and then close TurboTax.
5. Restart TurboTax and open the backup copy to make sure it's not corrupted. If you get an error, delete the backup and repeat these steps.

If you make changes to your original tax return file, repeat these steps to ensure your original and backup copies are in-synch.

Related Information:                             

• Retrieve a Tax File from a Portable Device
• What's the difference between the tax data file and the PDF file?

AND save it as a PDF so you have access to a copy even if you don’t have the program still installed and operational :

• How do I save my return as a PDF in the TurboTax software for Mac?
• How do I save my return as a PDF in the TurboTax software for Windows?

AND protect the files :

• How can I protect the tax files on my computer?

*** Other clues to the downloaded program ***

In the forms mode ... double click  or right click on a box on a form to data source it ... sadly it doesn't work on all boxes. 

What's the meaning of all the different colors in Forms Mode?

When you look at an onscreen tax form using Forms Mode, you might wonder why one figure is blue and the one next to it is red or black.

These colors indicate the source of that data.

Color	Meaning
Blue	You entered this data, either in the interview or Forms Mode.
Black	The program entered this data or calculated this amount.
Red	This data has either been overridden or is invalid (for example, a ZIP code that doesn't exist).
Red italics	You marked this amount as estimated.
Black italics	The program calculated this amount from an amount you marked as estimated.
Purple	This information has supporting details.
Aquamarine	This data was transferred over from last year.
Green	This data was imported from Quicken or QuickBooks.
Yellow fields (Windows)	Yellow fields allow user input. Anything you enter here shows up in blue.