turbotax calc'd my 2024 estimated taxes for self employed income; can I ask it to recalc for investment income?

[untuit]

Turbotax 2023 calculated my 2024 estimated taxes for self employed income and I am quite used to that routine. The business income does fluctuate, and sometimes I make a seat of the pants adjustment to later payments using excel.

This year for the first time we have taxable investment income. There was a fair amount in the first six month, but I expect investment income to be less for the rest of the year. I can I ask Turbotax 2023 to recalc the estimated taxes for to take into account the known investment income to date? I would use the tax forms from the financial services company. I have made the ttax-calc'd payments 1 + 2 for 2024 without adjustment. I kind of guess that it might be too much to ask of ttax 2023, and probably need to resort to the excel and seat of pants method. To date, the business income is tracking close to last year's income.

[Mike9241 · Accepted solution]

under the tax laws to avoid underpayment of estimated tax penalties (UETP) for not having enough withheld and/or paid through timely estimated tax payments you must meet one of these two rules

timely payments must equal 90% of your 2024 tax or they must equal 100% of your 2023 tax (110% if your 2023 adjusted gross income was $150,000 or more). if you meet either rule there are no UETP even if you owe a significant amount when it comes time to file for 2024

estimated tax payments are credited on the date made. if you don't meet either rule above adjusting them now for investment income earned in the first 6 months might still subject you to   UETP for the 3/31 and 5/31 periods.

you might be able to use the annualized income installment method to lower these penalties form 2210 page 3

[VolvoGirl · Accepted solution]

You can enter the investment income in the estimated tax section.   I have H&B also.  I also use the What-If worksheet to figure my income and tax.  I have big changes for 2024 since my husband died in 2023 and I will be going from a Joint return to Single.  I did a What-If Worksheet and made a column for 2024.   Once I figured my income and tax I went though the Estimated Tax Payment Options worksheet

You can just type W4 in the search box at the top of your return, click on Find. Then Click on Jump To and it will take you to the estimated tax payments section. Say no to changing your W-4 and the next screen will start the estimated taxes section.

OR go to
Federal Taxes or Personal (Home&Business version)
Other Tax Situations
Other Tax Forms
Form W-4 and Estimated Taxes - Click the Start or Update button

Say No to W4. When you get to the W4 and Estimated Taxes section, say you want to adjust your income to go though all the screens.

If you have the Desktop program you can do a What-If worksheet.

Go to Forms Mode, click Forms in the upper right or on the left for Mac. Then click Open Forms box in the top of the column on the left. Open the US listing of forms and towards the bottom find the What-if worksheet. It's right under Estimated Taxes.

[dmertz]

Given that the investment income occurred early in the year, it's likely that annualizing income would increase the underpayment penalty for the earlier quarters rather than reduce it.

About the only way to reduce the underpayment penalty for earlier quarters would be to have taxes withheld from income during the remainder of the year.  Unlike estimated tax payments, tax withholding is treated by default as having been paid evenly throughout the year no matter when during the year the withholding is made.

[untuit]

Wow, thanks to all three of you. Each was useful. Now I know what to do.