Tax estimate software

[gayl]

I've estimated my 2023 income (pretty easy when it's pension, inyerest, dividend on 2 ETFs) and put the #s into AARPs program. 3 times. Exact same numbers. Answer varies from 2208 refund, 0 refund, owe 800+. No issue with owing less than 1k as that's what I aim for. But why 3 answers? Bottom line: their online calculator is useless

BTW I'm not used to refunds

[pb4uski]

I use https://www.irscalculators.com/tax-calculator or Turbo Tax What-If Worksheet.

No idea why you would get 3 different answers using the same input.

[gayl]

I'll try the IRS site. If I potentially owe more than 1k I'll take $× from IRA give 80% IRS & 18% State

[Car-Guy]

I've used the AARP's calculator too but I never noticed getting different answers unless I change the data entry... What I started doing is just using last years TT and starting a new "what if return". Should be pretty close. Easy to save and make changes for tax planning purposes.

[Midpack]

I thought AARP used the same calculator as https://www.dinkytown.net/java/1040-...lculator.html? But I've never seen it provide different results for the same inputs. Dinkytown certainly doesn't do that. If you get different answers, there's an input error somewhere.

A great resource IMO.

[gayl]

Quote:

Originally Posted by gayl I'll try the IRS site. If I potentially owe more than 1k I'll take $× from IRA give 80% IRS & 18% State

Ok. Pretended like I was doing taxes & looked up result on tax table. Really roughed out. Seems like I won't owe.

My stuff is super simple:
Gross pension - non taxable amt + dividends / interest - carryover capital losses = taxable income. Less standard deduction. Look up amt on table. Subtract taxes withheld. If that's right then faster / easier to not use a program.

[brett]

I have always used my previous year's tax program for estimating the following year's tax position.

[audreyh1]

Quote:

Originally Posted by brett I have always used my previous year's tax program for estimating the following year's tax position.

Right, the “What If” form under TurboTax. You can use it for the following year new tax brackets.

[COcheesehead]

AARP uses Dinkytown’s tool. I use it all the time, but forgetting to check a box, missing an entry or transposing a number is the only way you’ll get a different answer with the same data.

[Sunset]

Quote:

Originally Posted by brett I have always used my previous year's tax program for estimating the following year's tax position.

+1
I just use a copy of last years tax return file (taxcut) and then change the numbers for the next year, it gives me a pretty good estimate.

[Sunset]

I only estimate to do Roth conversions...

For taxes I don't worry, I just pay 110% of last years taxes so there are no penalties regardless of how far off it ends up.

[MJ]

Quote:

Originally Posted by Sunset I only estimate to do Roth conversions... For taxes I don't worry, I just pay 110% of last years taxes so there are no penalties regardless of how far off it ends up.

Assuming your income increased over the previous year, you need only pay 100% of the previous year's taxes prior to April 15. This is from the IRS, "Generally, most taxpayers will avoid this penalty if they paid at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller."

[Sunset]

Quote:

Originally Posted by MJ Assuming your income increased over the previous year, you need only pay 100% of the previous year's taxes prior to April 15. This is from the IRS, "Generally, most taxpayers will avoid this penalty if they paid at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller."

For many folks this is true, but not for higher income folks, and our doing Roth conversions push us into that range:

"Higher Income Taxpayers

If your AGI for 2022 was more than $150,000 ($75,000 if your filing status for 2023 is married filing a separate return), substitute 110% for 100% in (2b) under General Rule, earlier.

For 2022, AGI is the amount shown on Form 1040 or 1040-SR, line 11.
Note.

This rule does not apply to farmers and fishermen. "


https://www.irs.gov/publications/p50...link1000194576

[Koolau]

Because I've been taking extra (beyond RMD) from 401(k), the 20% withholding always assures that I pay "enough." I've been trying to slowly reduce what I'm paying on other sources of income - especially pension. It's a balancing act. I've just been using last year's 1040 and adjusting the numbers. YMMV

[MJ]

Quote:

Originally Posted by Sunset For many folks this is true, but not for higher income folks, and our doing Roth conversions push us into that range:

Thanks for the correction!

[brett]

In addition to estimating our taxes I do a second pro forma tax return, using my previous years program in mid/late November.

By then we have a very good line of sight to what our investment income will be. We adjust accordingly, take into account any tax installments made, and come out with an estimate of tax owing. This has been very accurate over tha last 15 or so years that I have been doing it.

This allows us a little time to make whatever changes we can make to lessen tax owing.

I use the same tax program every year so I am familiar with it to the point that this is a fairly quick exercise for each of our pro forma tax returns.