Figuring out estimated taxes

JLFTUFreeForum
JLFTUFreeForum Member Posts: 5 Newcomer
in General

I know FreeTaxUSA does not figure out Estimated Taxes (Federal and State) for the upcoming year. Hopefully FreeTaxUSA does finally incorporate this.

Re: Misc > Payments > 202X Estimated Tax Payments.

Would it be possible to let users know for example tell them to preview a 1040 PDF and look at Line 24 and divide by 4. This would give you your Estimated tax for the next year. Then they would be able to enter in the amounts in the appropriate filed.

This is assuming that the 1040 does not change with the new tax laws coming up.

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Answers

  • Henry
    Henry FreeTaxUSA Agent Posts: 123

    Hi JLFTUFreeForum, thanks for your feedback! We're always looking for ways to make our software more user friendly.

    As you mentioned, our software doesn't calculate next year's estimated tax payment amounts for you. Instead, we provide a link to the 2025 Estimated Tax Worksheet to help you figure out how much to enter for your 2025 payments. Then we'll generate 1040-ES vouchers for you to print and mail in with your payments.

    To determine the applicable quarterly payment amount, dividing the amount on Form 1040, line 24 by four may work for some taxpayers, but the calculations can be a little more complicated for others. Our instructions direct you to pay 90% of the tax bill you think you will have next year, or 100% of the tax shown on your 2024 tax return. However, if the AGI shown on your 2024 return is more than $150,000 ($75,000 if married filing separately), you need to pay 110% of your 2024 tax in order to avoid an underpayment penalty.  

    Another thing to consider is that the IRS instructions (see pg 6) direct you to figure your 2024 tax using the amount shown on line 24 of your 2024 Form 1040, reduced by:

    1. Unreported social security and Medicare tax or RRTA tax from Schedule 2 (Form 1040), lines 5 and 6;
    2. Any tax included on Schedule 2 (Form 1040), line 8, on excess contributions to an IRA, Archer MSA, Coverdell education savings account, health savings account, ABLE account, or on excess accumulations in qualified retirement plans;
    3. Amounts on Schedule 2 (Form 1040) as listed under Exception 2, earlier; and
    4. Any refundable credit amounts on Form 1040 or 1040-SR, lines 27, 28, and 29, and Schedule 3 (Form 1040), lines 9 and 12.

    So if any of those items apply to your situation, you may need to do some additional calculations to determine your 2024 tax for 2025 estimated tax purposes.

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