What's the best and easiest way to calculate Estimated Taxes? Do I really need to pay them if I have SSDI and rental income? How do I always remember to pay them?

[Nero1]

Estimated Taxes seem very difficult for me to calculate every year. I have to pay them because of a small rental property and rental income. For some years, I don't get rental income for the whole year if a tenant moves out, and a new tenant needs to be found. So I have to estimate income that can be inconsistent from year to year. What's the easiest and best way for me to calculate my Estimated Taxes as accurately as possible? 

I also receive SSDI payments. Do I really need to pay Estimated Taxes if I have SSDI and rental income (not always for the full year)? I also have small-ish amounts from interests/dividends. My filing status is single with no dependents. 

[Critter-3]

You can have withholding from the SSDI monthly so you don't need to pay the quarterly estimated payments. 

[xmasbaby0]

To have federal tax withheld from your Social Security benefits:

https://www.ssa.gov/benefits/retirement/planner/taxwithold.html#:~:text=You%20can%20download%20the%2....

[Nero1]

Should I get SSDI taxes withheld if I also have rental income?

Do you know how often people on SSDI choose to withhold their taxes? What are the pros and cons of that?

[VolvoGirl]

You can have withholding from SSDI.  If it's enough to cover your tax due on your other income then you don't need to send estimates.  I would go with withholding from SSDI and not worry about estimates.

[xmasbaby0]

@Nero1 You asked about paying quarterly tax payments and expressed that doing that is difficult for you to remember, etc.   The idea of just having tax withheld from your Social Security gives you an alternate way to pay the tax without having to send in quarterly payments.    Pick one method or the other.   If you just have tax withheld from your SS, then you would not have to worry about the quarterly estimated payments for the rental income.

And....we do not know how much rental income you are receiving since you did not tell us.   We do not know if you are receiving enough rental income to have  a big tax bill.  

[Nero1]

If I have my SSDI withheld, why would that mean I don't have to pay Estimated Taxes for rental income? Does that depend on the amount of rental income? It's $4,000/mo, but this year, the tenants are moving out, so I might not receive rental income for up to a few months before a new tenant can be found. Last year, it was rented the whole year, though. 

[VolvoGirl]

Any withholding you have will cover the tax on all your income.  So if you have enough withholding from SSDI etc. you don't need to send in estimated payments for the rental income.    It goes by your total income for the year.  Your SSDI might not be taxable.  it depends on your total income.  But you can still have withholding taken out of it.   But not state withholding since SS and SSDI are not taxable on the state return.  So you may need to send in estimates for a State tax due.  

Up to 85% of Social Security and SSDI  becomes taxable when all your other income plus 1/2 your social security, reaches:

Married Filing Jointly: $32,000

Single or head of household: $25,000

Married Filing Separately: 0

[Hal_Al]

Q. What's the best and easiest way to calculate Estimated Taxes?

A. Divide last year's  tax liability (line 24 of the 2021 form 1040) by 4.  That is the amount you need to pay quarterly for 2022. 

If you expect to owe less than $1000, at tax time, quarterly estimates are not needed. 

End of basic question.

ADDITIONAL INFORMATION

TurboTax (TT) can prepare the quarterly payment vouchers. In your 2021 software, enter at:

 Federal Taxes or Personal (H&B version)

-Other Tax Situations

  -Other Tax Forms

    -Form W-4 and Estimated Taxes - Click the Start or Update button

On the next screen answer No to the W-4 question

 You should pay in quarterly estimated taxes if you don't have enough withholding taken out to cover the tax on all your income. You might be able to increase your SSA-1099 withholding, on your SSDI income, to account for the extra income.
You should make estimated tax payments for the current tax 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. (110% if your income was more than $150K) . Your prior year tax return must cover all 12 months.

If your goal is just to avoid the underpayment penalty, then paying 100% of the prior year tax liability is the “safe haven”

[Sandyjb555]

I have spent hours trying to research this myself, but still no answers. My husband about to go on LTD and receive SSDI. He has a LTD policy though work for an additional 15% of his annual pay vs the standard 50% when on SSDI.

So one check will come from the LTD insurance through work.

Second check will come from SS for SSDI.

The LTD company says: The check he will receive from us, only 46% of that check is subject to federal tax, which helps us fill out THEIR W4-S form for withholding.

But with SS, we can not get an answer as to what percent of tax we should hold back on the W4V form, because we don't know what portion of the check from SSDI will be subject to federal tax.

Married, filing joint, the only income will be from SSDI and LTD company, no other income..  

Is there a chart somewhere with incomes  thresh holds listed that says (with no other income but disability income) and you are married filing jointly, wife no income,  what percentage of that SSDI check is taxable? 

[JulieS]

Yes, this is a complicated calculation, which is why you aren't finding easy answers. There's a lot of variables, so one fairly easy option is to use TurboTax TaxCaster to get an estimate of your tax liability.

Here's how to do that:

1. Start here to find the tool.
2. Enter the information about your family and filing status. 
3. When you get to Other Income, enter the SSDI as Social Security Benefits, and the taxable part of the LTD insurance as Other Income.
4. Skip anything that doesn't apply.
5. At the end, you will get an estimate of your tax liability based on 2023 tax law.