2021 Estimated Tax

[PPECPA]

Why is lacerte generating 2021 estimated tax payments when the 2020 retunrs shows refunds for state/federal?

Client has never had a tax due (in past 6 years).  Not too sure why Lacerte is generating a 2021 estimated tax payment schedule for the state?

Any help is appreciated.

[Just-Lisa-Now-]

High income taxpayer?

[PPECPA]

Hey Lisa

Thanks for the  reply.  Not so much.  Income has not changed materially in past 6 years.  For the most part all is pretty static.

[Just-Lisa-Now-]

Does number 3 apply?

Do I need to pay estimated taxes?

That depends on your situation. The rule is that you must pay your taxes as you go.

If at filing time, you have not paid enough income taxes through withholding or quarterly estimated payments, you may have to pay a penalty for underpayment.

To determine whether you need to make quarterly estimates, answer these questions:

1. Do you expect to owe less than $1,000 in taxes for the tax year after subtracting your federal income tax withholding from the total amount of tax you expect to owe this year? If so, you're safe—you don't need to make estimated tax payments.
2. Do you expect your federal income tax withholding (plus any estimated taxes paid on time) to amount to at least 90 percent of the total tax that you will owe for this tax year? If so, then you're in the clear, and you don't need to make estimated tax payments.
3. Do you expect that your income tax withholding will be at least 100 percent of the total tax on your previous year's return? Or, if your adjusted gross income (Form 1040, line 8b) on your tax return was over $150,000 ($75,000 if you're married and file separately), do you expect that your income tax withholding will be at least 110 percent of the total tax you owed for the previous year? If so, then you're not required to make estimated tax payments.

[PPECPA]

Hey Lisa,

Based on all questions, the client should not be required to pay estimated tax payments.  Furthermore, based on the Federal - ES Worksheet calculations (box 14a and 14b) the client is not required to make estimated tax payments.  In short, the calculation results in a negative balance when income tax withheld through payroll deductions (line 13) exceeds the total estimated 2021 tax  (line 11c).  Still, the program is generating estimated voucher payments.

I've also checked the 2020 estimated tax payments and 2021 Estimates to ensure nothing has been inputed.

I'm scratching my head on this one.

[Just-Lisa-Now-]

Ive had it happen on clients in the past that just dont make sense to me, I just check the box to not calculate estimates and move on...I have to pick and choose my battles!

Im using ProSeries so Im not sure how you can block them in Lacerte, sorry.

[George4Tacks]

Look at Settings >  Options > Tax Return > Alabama Options > scroll up and look at Form 1040-ES Options and see if you want to modify those.

In the Individual return, Screen 7 > 2nd item has a drop down to modify the choice from above on an individual basis. 

Go to Forms view and look at the ES Wkshts about 80% of the way down the list of all forms.