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October 1, 2021
Question

How do I figure out my estimated tax payments for this year on TurboTax when I was not self employed last year?

  • October 1, 2021
  • 2 replies
  • 0 views
Last year I was an employee who received a w-2. This year I’m self employed. I need to estimate my payments on income I’m making this year and not on last years income. Turbo tax wants to only look at 2020 income.

2 replies

Carl11_2
Employee
October 1, 2021

General rule of thumb I've been following for more than 15 years of self-employment now.

If you send the IRS 20% of your *gross* business income each quarter, then come tax filing time you'll be fine. If your state also taxes personal income, then you should send your state whatever percentage they tax personal income at. You can check what your state's highest rate is at https://turbotax.intuit.com/tax-tips/fun-facts/states-with-the-highest-and-lowest-taxes/L6HPAVqSF.

By doing it this way, I'm practically guaranteed to be well within $1000 of my tax liability come tax filing time. Therefore, if I'm less than $1K short there's no underpayment penalty. If I'm over then the difference gets refunded to me. In the 15 plus years I've done it this way, I've only owed additional tax twice, and both times it was less than $500.

 

Employee
October 1, 2021
**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
VolvoGirl
Employee
October 1, 2021

When you go though the estimate section you can enter your estimated 2021 income.

To prepare estimates for next year you need to be in your current return. If you can't get your return open, Try this, you can sign back onto your account, click on Add a State. This should get you back into your return. Be very careful not to change anything in your actual return.


To prepare estimates for next year you need to be in your current return. But be careful not to change anything in your actual return.

In TurboTax Online, sign in to your account.
Select Tax Home in the left menu.
Scroll down to Your tax returns & documents.
Select 2020, and then select Add a State (you're not actually adding a state, this just gets you back into your return so you can make changes).


Search by typing in W4. Hit the Enter or Return key to get the Jump to w4 link to show up. Go to the W4 page and it will ask if you want to Change your W4. Click on NO. The next page will start the Estimates.

VolvoGirl
Employee
October 1, 2021

Tip....If you didn't owe or missed making the prior quarterly estimated payments and need to just calculate starting now, you can go though the Estimated Taxes section and just put $1 (one dollar) in for the quarters you missed. Then it will only figure the current and remaining quarters.