Need Help Calculating State Estimated Tax Payments

[kp79]

Hello,

I am creating a spreadsheet to calculate and model my estimated taxes for the year. This is to make sure I dont make any mistakes with estimated taxes, and to save me time in future years.

(If you're wondering, I am a happy TurboTax customer but prefer to estimate my taxes this way)

Sources of Income:

I am semi-retired and worked part time throughout the year from my home in Charlotte, NC for 2 jobs, both remote. My sources of income throughout the year were:

A. $25K from a remote part-time W2 job for a company located in NY (this company's pay statements / W2 have tax deductions for the state of NY).

B. $45K from a remote part-time W2 job for a company located in CA (this company's pay statements / W2 have tax deductions for my LOCAL state of NC, so I take it that this income is "attributed" to the state of NC, not CA)

C. $50K from my remote rental property in the state of CA.

D. Short Term (ST) Capital Gains income: $90K from Short term capital gains.

E. Long Term (LT) Investing income: $250K from Long term capital gains. 

All trading / investing was done from my home in Charlotte, NC and may not be repeatable.

I am trying to calculate my estimated tax payments for: Federal, State of NC, State of CA, State of NY

I have some Questions:

Q1. For estimating federal taxes, income (and ST capital gains) are taxed at income tax rates (based on tax tables), long-term capital gains are currently taxed at 15% or 20%. Is this correct?

SEE https://www.nerdwallet.com/article/taxes/federal-income-tax-brackets

Federal income tax (F1) would be calculated using: A+B+C+D

Federal LT capital gains (F2) would be calculating using: E

And then total Federal tax owed would be F1+F2, minus any standard federal deductions. Is this correct?

Q2. For estimating state taxes:

The state of NC has a flat 5.25% tax rate. SEE https://www.tax-brackets.org/northcarolinataxtable

Would the total NC State tax owed be calculated based on: B only (taxed at 5.25%), B+D+E (taxed at 5.25%), or A+B+C+D+E (taxed at 5.25%)?

The state of CA has a tiered tax structure. SEE https://www.tax-brackets.org/californiataxtable or https://www.nerdwallet.com/article/taxes/california-state-tax

Would the total CA State tax owed be calculated based on: C only (taxed based on the CA tax tables), or A+B+C+D+E (taxed based on the CA tax tables)?

The state of NY also has a tiered tax structure. SEE https://www.nerdwallet.com/article/taxes/new-york-state-tax

Would the total NY State tax owed be calculated based on: A only (taxed based on the NY tax tables), or A+B+C+D+E (taxed based on the NY tax tables)?

Q3. It seems crazy that I would have to pay taxes on ST and LT capital gains taxes for EACH state I had income in. Surely it would only be taxed at the federal (and perhaps only my primary state of residence), correct? How to prevent double-taxation (and penalties), if living in one state and working remotely in others?

Q4. When estimating state taxes, similar to the federal standard deduction, states also have a standard deduction. Can the State Standard deduction be applied for *every* state I earned income from, or only to my primary state of residence (NC)?

Q5. When calculating estimated tax payments for Q1-Q4 for the state of NC, where can I find the Percentage of Tax due for each quarter to avoid the penalty? What is the penalty % rate? A link to an official resource would be appreciated (I couldn't find one, despite quite a bit of time googling)

Q6. The maximum net capital loss in any tax year is $3,000. Is this applied on ST (short-term) capital gains only, or ST+LT?

Q7. When does NEI / Net Investment income of 3.8% come into effect? Would it apply to me?

Thanks for responding.

[Anonymous_]

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@kp79 wrote:

(If you're wondering, I am a happy TurboTax customer but prefer to estimate my taxes this way)

---

I fully understand but, frankly, very few (if any) others estimate taxes in this manner, particularly state taxes where there is state source income in more than the state of residence.

As a result, you might be better off simply purchasing one of the installed (desktop) versions of TurboTax along with the states (obviously, you get the first one free with TurboTax Premier desktop) since your scenario is complicated due to nonresident states.

[Critter-3]

The feds and all those states have Safe Harbor options where you can pay in an amount ( or more) than what was required last year... this will avoid underpayment penalties (the mail purpose for estimated payments)  even if you owe on the return.  This would save you all of the math calculations you are doing  OR  just use the Downloaded version of the program every year and you can use the program to do all the estimates for you easily ... yes I know you like doing it the hard way but why ? 

Do I need to make estimated tax payments to the IRS?

PAYING ESTIMATES
For SE self employment tax - if you have a net profit (after expenses) of $400 or more you will pay 15.3% for 2015  SE Tax on 92.35% of your net profit in addition to your regular income tax on it. So if you have other income like W2 income your extra business income might put you into a higher tax bracket.

You must make quarterly estimated tax payments for the current tax year (or next year) if both of the following apply:
- 1. You expect to owe at least $1,000 in tax for the current tax year, after subtracting your withholding and credits. 
 
- 2. You expect your withholding and credits to be less than the smaller of: 
    90% of the tax to be shown on your current year’s tax return, or 
  100% of the tax shown on your prior year’s tax return. (Your prior year tax return must cover all 12 months.)

https://ttlc.intuit.com/replies/3301891

Can TurboTax calculate next year's federal estimated taxes?

https://ttlc.intuit.com/replies/4242911

Can TurboTax calculate the estimated payments for next year's state taxes?

https://ttlc.intuit.com/replies/3301735

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

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

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

AND protect the files :

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

[kp79]

@Anonymous_ thank you, but I am trying to get these answers myself without buying yet another product. It adds up.

[kp79]

@Critter-3 Thank you for all this information! I had forgotten about the Safe Harbor rules - looks like they apply at the Federal AND state levels. 

My income across all sources has always been more than $150K...and will likely continue that way.

This is what I could find for the safe harbor percentage (for the prior tax year) for:

• Federal - 110% of last year's tax, according https://turbotax.intuit.com/tax-tips/small-business-taxes/estimated-taxes-how-to-determine-what-to-p... 
• State of NC - I couldn't find this. Is it 110% of last year's tax? Found that from here but it's not official + looks really out of date (2009): https://www.tjtpa.com/wp-content/uploads/200908.pdf ?
• State of CA - 110% of last year's tax, according to https://www.ftb.ca.gov/pay/estimated-tax-payments.html 
• State of NY - 110% of last year's tax, according to https://www.tax.ny.gov/pit/estimated_tax/who_must_make.htm

I am mostly concerned about the State of NC (my home state of residence). Are you able to find an official source mentioning the safe harbor rules? I couldn't find it at https://www.ncdor.gov/taxes-forms/individual-income-tax/estimated-income-tax

Thank you.

[kp79]

Also, putting Estimated Taxes aside...

It would still be helpful to get answers to my original questions to get a sense of how much I would owe in taxes for the upcoming year (especially about what qualifies as income for different states and Short and Long term capital gains). 

I'm hoping someone will be able to help here, so I'm leaving the question open. 

[Anonymous_]

I understand. 

My only point was that very few people use spreadsheets for estimated tax calculations and, also, it is likely that few people have your particular states installed in order to do any kind of reasonable analysis.

Hopefully, someone may provide an answer here but, if it is any consolation, you should be able to buy the 2021 version of TurboTax sometime next month (which you will need, in any event, to prepare your 2021 returns).

[kp79]

@Anonymous_ makes sense, thank you!

[Critter-3]

None of the 2021  state programs will be available until late Jan 2022 at best.

To do all the estimations you want you will need to either use the 2020 downloaded  program or your manual calculations like you have in the past. 

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

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

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

AND protect the files :

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