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gmccombs
New Member

why am i getting quarterly estimated payments

 
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2 Replies
AnnetteB6
Employee Tax Expert

why am i getting quarterly estimated payments

There is something in the program that generates those vouchers.  The following TurboTax help article will give you some examples for when they are printed with your return.  However, there is nothing filed with the IRS with regard to these vouchers for the next tax year and you are not required to use them or make the payments.  They are there only to assist users who do wish to make estimated payments.

 

Why did 1040-ES estimated tax vouchers print out? Do I need them?

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why am i getting quarterly estimated payments

If you're referring to the Estimated Tax (ES) vouchers generated by TT, by default it is using a calculation for minimum tax payments based on 2024 information.

 

See FAQ on ES here https://www.irs.gov/faqs/estimated-tax

 

Generally, to avoid underpayment penalty for 2025 you either need to pay 100% of 2024 tax (110% if AGI > 150k), or 90% of 2025 tax whichever is smaller (the 'safe harbor').  See FAQ above for more details ('how do I know if I have to make quarterly estimated tax payments').

 

Unless you provide 2025 income information (see below), TT defaults to the 100/110% of 2024 option, assumes any withholding from 2024 remains the same in 2025, and the difference is the estimated tax vouchers it generates.

 

If you had a large one-time income event in 2024 you don't expect again in 2025 (e.g. Roth conversion, cap gains etc), this default estimated tax calculation will likely be more than you need to pay in estimated (or final) taxes.  If your income/withholding is steady year to year then the ES vouchers may also be too high or not needed as it's assuming by default you will pay "100% of 2024 tax" instead of "90% of 2025 tax".  Or, your withholding may be too low e.g. you owed too much tax on your 2024 return and had a penalty.

 

To adopt the "90% of 2025 tax" option, go thru the interview in Other Tax Situations / Form W4 and Estimated Taxes, which will ask for more information on your expected 2025 income and withholding.

 

You also simply ignore the TT ES calculation/vouchers if you are comfortable with your situation, but it's worth understanding why they were generated.  Once you figure out your 'safe harbor' amount it gets easier to think about withholding and ES if needed.

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