Possible error in 2023 estimated taxes

[jimandginny]

My estimate for 2023 includes dividend income or 52,000 and ordinary income of 260,000.  Turbo Tax calculated my 2023 estimated taxes as 44,529.  Using 2023 tax schedule, 15% for dividends and 3.8% net investment tax, I get 49,209 tax on ordinary income, 7,800 on dividends, and 1,976 on 3.8% net investment tax for a total estimated tax of 58,985.  That is, Turbo Tax is coming in 14,456 lower than expected based upon my calculations.

I entered the same income numbers in the 2022 tax return as a test and Turbo Tax calculated taxes of 60,179 using the 2022 tax rate schedules.  That is, Turbo Tax is coming in 15,650 lower than the 2022 Tax calculated by Turbo Tax for 2022.

Am I missing some tax benefit from tax law changes for 2023?  Or is the software calculation in error?

[Mike9241]

You have not provided enough info to check your computations. filing status? standard or itemized deductions? over 65? what is the source of the $260K? how much of $52K in dividends are qualified dividends?  

[ErnieS0]

In general, you may owe the penalty for 2023 if the total of your withholding and timely estimated tax payments didn't equal at least the smaller of:

• 90% of your 2023 tax, or
• 100% of your 2022 tax. Your 2022 tax return must cover a 12-month period.

The IRS levies a penalty for underpayment of estimated tax if you didn’t pay enough tax throughout the year, either through withholding or by making estimated tax payments.

Generally, most taxpayers will avoid this penalty if they owe less than $1,000 in tax after subtracting their withholdings and credits, or if they paid at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller.

Refer to Penalty for Underpayment of Estimated Tax

[jimandginny]

Married filing jointly, standard deduction, over 65, qualified dividends.

As for income source the form only includes one line for other.  Other included social security (taxable amount only) and IRA distribution (taxable amount only).  The program accurately calculated the taxable ordinary income.

The tax computation was the part that did not report the expected result.

[jimandginny]

I just went to the program to get line by line numbers.  My error.

To users be careful.  Don't assume that if you enter qualified dividends that they will be included in other income.  Also, you must include net investment income on the line provided and also in other income.

Bottom enter both net investment income, qualified dividend and then other income should include all your taxable income from other sources plus net investment income.  The interview doesn't tell you this but the form does.  The interview for this section could be improved.