How do estimated tax payments affect the amount of tax I owe?
Like the income tax withheld on a W-2, estimated tax payments are subtracted from your total tax amount. We make sure you get credit for any federal and state estimated tax payments you made and also help you determine if you should make estimated payments for next year.
As the name suggests, these payments are “estimates”. If you underestimated income or overestimated deductions when you calculated your payments, you may still owe tax. This is especially true for self-employed individuals with income and expenses that fluctuate throughout the year.
If you expect your income or deductions to change next year, you’ll have an opportunity to review them and make any necessary adjustments in the Other Tax Situations section.