Enter payment made to IRS via Direct Pay under "Balance Due"

[sbachawat1979]

I am a resident of California and we have given time till 10/16/23 to file both state and federal tax return. However I made payments to both Federal and State in April of this year for tax year 2022 as I made calculations which showed I would owe taxes to Federal and State. 

This is not estimated taxes for last year but paid via Direct Pay and the Reason for Payment was " Balance Due" and Tax Year for Payment was selected as 2022. This was to avoid any underpayment penalty when we would actually file the tax returns. 

How can I enter this on the Turbo Tax Premier Desktop version? Please advise. 

Thank you in advance. 

[VolvoGirl]

I think you should enter that as an extension payment.

To enter the amount you paid with an extension (including state extension) go to

Federal Taxes (or Personal for desktop H&B version)

Deductions and Credits

Then scroll way down to Estimates and Other Taxes Paid

Other Income Taxes - Click the Start or Update button

Next page second section Payments with Extension

Either Visit All or Click Start or Update by the extension you paid

[Mike9241]

since you are using the desktop version you can use the "forms" mode (on the view tab). then click on the "Tax Payments" worksheet and enter the amounts on line 9 for 2022 extension payments. in the state "ID" column make sure to enter CA

[fanfare]

The correct place for your federal "Bal Due" payment is Schedule 3 Line 13z.

As far as I can tell TurboTax won't support this line, so that is why you are suggested to enter it as a "payment with request for extension", which it is not.

@sbachawat1979 

[sbachawat1979]

Thanks all. This is not an extension payment as CA was granted automatic extension. So how do I then reflect this on the tax return. This was a balance due payment which I did ahead of time and then the automatic extension happened.

[VolvoGirl]

If you don't want to enter it as an extension payment then just select you will mail a check and the IRS and state will match you payment up with your return.   Did your payment cover the tax due or do you still owe more (or should get a refund)?

[sbachawat1979]

I will have a refund for federal and dues for state.

[fanfare]

The other option for your CA return is to enter nothing about your Bal Due payment on your return.

amount you owe would then be "Bal Due" + "additional due"

You only have to pay the "additional due" since you already paid "Bal Due".
You can pay the "additional due" to CA the same way you did it the first time.

@sbachawat1979 

[sw48]

When you pay a 'tax due balance' for Form 1040 or 1040-SR using Direct Pay through the IRS website prior to the due date of the return, say it is April 15, you do not enter this as a separate estimate payment in TurboTax. You may be tempted to enter in the line under the 4 typical estimated quarter payments, but don't enter it there.  If you enter it there with a date, say you paid on 4/10, you will receive an IRS letter stating the IRS changed it on your filed return you sent in on or before April 15. Instead, the IRS wants that amount you paid, the balance due that paid already for Form 1040 or 1040-SR, to show up on the tax return on the line below estimated payments, titled: Other forms. For 2023, it was Line 25c.

What is the pathway in TurboTax to get to correct input screen for entering the payment?

1. Deductions and Credits

2. Estimates and Other Taxes Paid

3. Other Income Taxes

4. Other Income Taxes Paid in 202X.

5. Withholding not already entered on a W-2 or 1099.

6. Question: Do you have any tax withholding you haven't entered yet? Answer YES, even though it was a separate payment at the IRS website and not an actual withholding. This is where you need to enter it.

7. Federal withholdings - Amount. Fill in the amount you paid at the Direct Pay - IRS online website.

8. Press Continue.

Congratulations! You avoided the IRS sending you a letter, informing you they adjusted your estimated tax total, since you now correctly have entered it on as separate line item, 25c. It is now included in any W-2 withholdings and 1099s (like 1099-R) total, showing up in Line 25d. Thus, any estimated tax payments and applied amount from prior year return total, Line 26, for 2023 is reflected the IRS requires. By the way, assuming you calculated the balance due correctly and your Direct Pay amount covered you tax bill, you won't owe anything more. Amount due will be stated as $0.00 in the IRS letter you receive if you put the payment in the wrong place.