For 2019, my partnership has paid quarterly estimated taxes to the IRS. The last quarter was probably over estimated since business declined significantly.
When I did the 1065 (K-1) for the partnership, I could not find anywhere in Turbotax Business to account for the taxes I already paid on behalf of this partnership. I got help from Turbotax employees, and they were stumped. I asked if I should enter this in the Other Taxes in deductions section. I got bounced around to a few different people and finally a tax professional hesitantly said YES.
In the last minute, I decide NOT to enter this information in the Other Taxes subsection of deductions because a questions suddenly arose in my mind that a paid tax might not really be a deduction. This is not like I bought something and paid taxes for it. This should really be a credit or something to tell the IRS "I already paid you!" and it did not make sense. Couple that with hesitant tax professionals telling me yes after I pressured them into giving me an answer, I figured that Partnerships are pass through entities and I would probably just enter this information in my Home & Business version of Turbotax.
Fast forward, we now have K-1s for me and my partner and we are doing our Home & Business version of Turbotax.
It is showing we owe a lot of taxes coming from the Partnership as if we paid no taxes at all. It is clear that I made a mistake somewhere. I'm not a tax professional, but I'm not stupid either. Please can someone help me? Where in the K-1 should it show the taxes we already paid the government? How is it we tell the government not to double tax us?
Should taxes paid for the year be considered a deduction?
That doesnt really make sense because a deduction doesn't really account for what you already paid into taxes. Say there is a 20% tax on say $100 which would be $20. Say I pay the IRS on a quarterly basis that $20. Then at the end of the year I file my taxes and put that $20 as a deduction and mark it as "Other taxes". Then the IRS will calculate taxes owed based on an adjusted income of $100-$20=$80. The tax owed in that scenario $16 on top of $20 already paid. So why on earth would we want to pay on a quarterly basis if it will cost us more taxes in the long run?
My understanding is I will still owe tax on the net amount if it is under Deductions->Other Taxes. That doesn't really make sense to me because it means I'm being penalized for paying taxes on a quarterly basis.
I'm thinking that either Turbotax Business has no entry for quarterly paid taxes because of bad design, or it is called something in IRS/CPA lingo that is unclear and was glossed over.
If anyone can help, please let me know. The Turbotax "Glance" software does not work. I'm on a Samsung laptop running Windows 10.
