Estimated Tax Payments for next year

[BrianJB]

This year (2024) I surrendered an annuity. It was a one time event. I had taxes withheld but not enough. Now my estimated tax payments (Form 1040-ES) reflect the additional income I know I will not have this year, next year my taxes (income) will not be as high. What can I do about that? If I make the payments indicated I believe the total will surpass what I owe by a good margin. Can I make estimated payments less than indicated on the forms generated by turbo tax?

My total income this year (2025) should approximate my income in 2024 minus the gains from the surrendered annuity. Can I subtract the gains from last year's income (2024) and get an estimate of what the payments should be for tax year 2025 and pay that amount?

[MindyB]

Yes, you can subtract the gains and pay estimated tax based on what you will earn in 2025 instead. You can either directly increase the payments online at eftps.gov (no voucher needed); change the vouchers you printed manually; print vouchers and fill in as desired from the IRS 1040-ES; or update in TurboTax and reprint. 

Here is how to update in TurboTax Online:

1. Navigate to Federal Taxes > Other Tax Situations
2.  Go to Other Tax Forms
3.  Start or Revisit Form W-4 and Estimated Taxes
4. Continue past the W-4 section to get the estimated tax section, Estimated Taxes for 2025 
5. You will be asked if you want to adjust  your income or deductions, answer yes, and manipulate the answers to increase your tax (in other words, estimate up income and/or down expenses). Here, you can adjust down for the gain.

[BrianJB]

Thank you.