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State Estimated Taxes Planning

jfclague

Trying to find out how people use the Tax Planner Tool to help with calculating state tax estimated tax payments since Quicken doesn't offer that as an option.

Thanks, Jim

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Frankx

Hi @jfclague,

I suggest that you base your estimated state income tax payments so that they will result in your having a "safe estimate". Which would mean using the total prior year state tax liability (from the state tax return) and dividing that by 4 to give you the quarterly payment. Of course if there was an unusual event in the prior year that caused the state tax liability to increase dramatically, you could scale back the payment amounts, however that could also cause you to be underpaid, which would likely result in your owing interest and penalties on the underpayments.

Hope this helps.

Frankx

Bob_L

I agree with @Frankx. Learn what your state's "safe harbor" is and go from there. If you want to forecast it yourself, then you need to delve into how your state works. For example in Virginia, I use federal AGI as a starting point and then take a crack at forecasting what the additions and subtractions will likely be.

Chris_QPW

Because of my tax situation I don't have to pay estimated taxes to the state, so I have never checked this out, but I was wondering if anyone knows if tax programs like TurboTax has a state estimate feature like it has for the federal one?

If it does, that would be my recommendation of what to use.

There is very good reason why Quicken doesn't do much of anything with state taxes. They are quite different.
In California it is mostly based off of the federal return, with very few "adjustments", and in fact if you are filing by paper you send them your federal return. In New Mexico it isn't like that at all, you don't directly refer to the federal return.

Boatnmaniac

I checked my TurboTax, TaxAct and H&R Block tax softwares for the last 3 years and they include the ability to estimate the federal quarterly tax payments but not the state.

However, I did look at a couple of states' tax websites and they both included online quarterly tax estimate calculators. So, maybe that is a good place to start?

Rocket J Squirrel

Boatnmaniac said:

I checked my TurboTax, TaxAct and H&R Block tax softwares for the last 3 years and they include the ability to estimate the federal quarterly tax payments but not the state.

? TurboTax generates California state estimates for me every year.

Frankx

@Boatnmaniac,

The TurboTax state modules all include the ability to generate estimated tax calculations and vouchers for the next year- if the state has an income tax requirement (some do not).

Frankx

Boatnmaniac

Hmmm...I just checked my TaxAct Premier 2018, TurboTax Home & Business 2019 and H&R Block Deluxe 2020, again. All were set up to include IL. All of them have next year tax estimating calculators for Federal but I could find no such calculators for IL State. Maybe it depends on which software version or which state?

Rocket J Squirrel

I can't speak for any software other than TurboTax for Windows desktop version, or any state other than California, but state estimates have been there as long as I can remember. They appear right on the first page of the state Filing Instructions.

Image: https://us.v-cdn.net/6031128/uploads/editor/jd/40gxo6xyqa9z.png

And for @jfclague , this is how I generate estimates. Quicken can't really do it.

Chris_QPW

Boatnmaniac said:

Hmmm...I just checked my TaxAct Premier 2018, TurboTax Home & Business 2019 and H&R Block Deluxe 2020, again. All were set up to include IL. All of them have next year tax estimating calculators for Federal but I could find no such calculators for IL State. Maybe it depends on which software version or which state?

It think it is there, but if you don't fit into that situation you will find it hard to find it (the reason I haven't seen it before in my use case).

For TurboTax I had to select "Show Topic List" and found it buried quite deep.

Bob_L

If you ignore the step by step method in Turbo tax, as I do, you will never see it: but, it will still compute estimates for state taxes using their defaults, and show them when you print things out. Bottom line is to use the step by step if you want estimates.

@volvogirl can probably shed more light on this topic re. TurboTax.

Boatnmaniac

Well, I reopened my 2019 TurboTax file and had to dig really deep to find the IL est tax payments info. It was not included in the step-by-step interview and there was no listing for it under Topics. But when I opened all the forms I did find the worksheets, forms and vouchers for it. Then it dawned on me why it probably is not shown for this particular tax file. My mother had passed away in 2019 and I used TurboTax for that year to file her final tax returns. She lived in IL so an IL return was needed but because it was her final tax year there was nothing to estimate for 2020. Duh!

I also reopened my mother's 2018 TaxAct file. Walking through the IL state interview there was a box I could check to complete the 2019 estimated tax vouchers.

And I reopened my brother's 2020 H&R Block file (he move to IL in 2020 which is why I get to continue doing IL state tax returns). And walking through the IL state interview I found a box I could check to complete the 2021 estimated tax vouchers.

So, it is confirmed that all 3 of these programs do have the ability to estimate the next year's estimated quarterly tax payments for the states that have been installed.

jfclague

Thanks everyone for their input.

My taxable income varies, in 2021, I am going to sell a bunch of investments and do a large Roth conversion so my income varies (also get bonus at work). Usually my W-2 withholdings are adequate.

I use TurboTax so I guess I will use that to estimate my MD taxes and use Quicken's taxable income as a starting point.