I just finished my taxes. For the first time ever, after using turbotax for 5 years, it printed form 1040-ES Payment Vouchers for 2005.

Now I have to pay estimated taxes for 2005. Is this new? what the heck? can anyone shed some light on this?

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Jennifer
90 350sdl

Firstly, let me qualify my comments with the fact that I am not an accountant and I do not use turbotax. I have a more sophisticated program called "Lacerte" that is only used by accountants. My accountant lets me borrow the Lacerte software. I do have a bit of knowledge on estimated tax payments, however, because I must watch it carefully due to self-employment.

My first question is whether you owe any money on the current return? If you do, then TurboTax will probably decide that you had better send in some more money, quarterly, next year, so that you do not owe any money when you prepare the return.

The worst scenario is to pay what you owe on April 15. This is not generally acceptable to the IRS and will result in penalties.

There are some exceptions. If you paid, by the date of January 15, 110% (I believe this is correct; might be 100%) of the prior year tax obligation, then there will be no penalty.

As an example:

2003 taxes: $15,200.

2004 taxes: $18,500.

If you have paid the government 110% of 15,200 by the date of January 15, 2005 ($16,720) then there is no penalty. You can pay the remainder, $1780., on April 15.

It's my guess that Turbotax is suggesting that you pay some quarterly payments (how much is up to you, but it should be equal payments every quarter) to prevent you from getting in a penalty situation on April 15. The penalties are quite severe so you don't want to be there.

More details on your specific situation are necessary to be sure.

You can PM me if you want.

Go to the IRS forms page at http://www.irs.ustreas.gov/formspubs/index.html and download 1040-ES/V.

It should tell you everything you need to know about paying estimated tax. I suspect that Turbotax is just covering their butts by having the program print the estimated tax voucher.

Wes