Some tax line mapping to category questions for Federal Income Tax

For a retiree with no W-2:

What tax line should be used for a portion of an income tax refund that is applied to next year's taxes so that the tax planner correctly calculates the tax due?

What tax line should be used for a Federal Income tax payment?

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Accepted answers

Rocket J Squirrel

Good questions. The answer to both is "none," but for different reasons.

There is no TLI which applies to a refund applied to the following year's tax liability. There could be one, but there ain't, as you can see from the Details on "Refund applied from prior year federal tax return" under Tax Payments. You have to manually enter it into the planner.

For a normal income tax payment, no TLI applies, which is correct.

Boatnmaniac

@leishirsute - If you make quarterly estimated tax payments I was reading that a tax refund applied to the following year's income tax liability should be applied to the 1st quarterly estimated tax payment for the following year. That seems logical to me but I am not a tax accountant. If correct I thought that perhaps you could use Form 1040:Federal estimated tax, quarterly for the tax line item. But in a test Tax Planner did not pick up the transaction...even though it showed the tax line item being correct.

I reviewed the rest of the tax line items available and did not see any for what you want to do. So, another situation where Quicken lacks a tax line item?

However, in Tax Planner in the Tax Payments section there is a field for Refund Applied from Prior Year Federal Tax Return. I manually entered an amount there and Tax Planner did use it correctly in calculating the remaining tax due so that could be an option for you.

All comments

Rocket J Squirrel

Good questions. The answer to both is "none," but for different reasons.

For a normal income tax payment, no TLI applies, which is correct.

Boatnmaniac

I reviewed the rest of the tax line items available and did not see any for what you want to do. So, another situation where Quicken lacks a tax line item?

leishirsute

@Boatnmaniac Thank you for digging into this and clarifying. I will use the Refund Applied field. It seems Quicken has already addressed this amount.

q_lurker

For the refund, I assume you are receiving the net amount into a checking account. I would consider a split transaction.

First line = gross amount of refund to Fed tax category, no tax line.

Second line = estimated portion as a negative to estimated tax category, previously discussed tax line.

Net of the two is the deposit.

That should get the right estimated payment flowing to the tax planner for the next year.

leishirsute

Yes, the refund is the net amount of amount overpaid less amount allocated to next year's taxes.

Makes sense. As @Boatnmaniac noted, the transaction detail will be missing the estimated tax amount of that transaction but the 1040-ES calculation will be correct.