putting numbers in Turbo Tax early

[Ole Red 29]

I have always waited until I received the actual numbers before inputting into Turbo Tax (in Feb/Mar). I've noticed some folks in this forum are talking about putting numbers in now. For those of you who do input early:

1. are you only inputting numbers you know for sure?
2. If you are inputting estimates, isn't it hard to keep up with what numbers in
TT are real and which are estimates?
3. I assume the benefit is getting an early estimate of your tax situation?
4. If you input numbers early, does it cause problems when you want to import actual numbers/forms later?

I just want to understand to see if I am missing out on something. thanks,

 

[finnski1]

1. I usually input numbers I know extremely close or exact to what I know they will be. Pays to be diligent during the year and know these at year end.
2. Don't find it that hard as I simply redo the whole thing with exact numbers.
3. Yes and have time to do modification if possible.
4. No

 

[JoeWras]

Yes, for estimates. The precision depends on what you want to accomplish. Some people here are very concerned with ACA cliff amounts. Others of us want to get in the ballpark of a tax bracket for Roth conversions. These are some of the many reasons people do it.

 

[Dash man]

I put in as exact as I can since I keep track of income and deductions in a spreadsheet. It’s easy enough to update when necessary. It’s frustrating that some of their input screens aren’t ready yet, such as for IRA conversions that can’t be entered yet.
I’m using the What If worksheet to get a good grasp of my tax liability, which will be significant this year with our combined Roth Conversions and Capital Gains from some stock sales. It helped us see if we do another Roth Conversion before the end of the year we can avoid the AMT.

 

[GalaxyBoy]

I sometimes start a file called "estimated taxes" and later start the "real" return using downloaded final values. I need the estimated return to figure out how much IRA to convert to Roth, and to make sure I've withheld enough (although I've usually been shooting for the safe harbor amount for withholding).

 

[Ole Red 29]

thanks for the replies so far. This is my first full year of retirement. I have been converting $ to Roth, receiving dividends, etc. and paying quarterly taxes. I am a spreadsheet guy as well. I keep track of everything on them. I see now it would be interesting to see how my spreadsheets compare to actual tax. I think running turbotax will show me any problems in my spreadsheet. thanks again.

 

[audreyh1]

And IRMAA thresholds, which is why I am estimating early for the first time this year. Normally I do an initial pass in early Jan for Jan 15 estimated taxes.

I’m using my own spreadsheets though. And having to estimate income I haven’t received yet, and guess at foreign tax credit and what percent are qualified divs.

 

[PatrickA5]

Heck, I've already started a 2021 estimated tax return. I do this throughout the year using the prior years software. My 2021 return will be the easiest in decades for me. No dependents, no college, etc. Finally!

 

[Ole Red 29]

Heck, I've already started a 2021 estimated tax return. I do this throughout the year using the prior years software. My 2021 return will be the easiest in decades for me. No dependents, no college, etc. Finally!

Does doing this mess up the 2020 tax return or is it "locked in" when you submit it?

 

[sengsational]

My early-entry process started years back with my pulling up my last year's (completed) tax software and printing the inputs. I'm not sure if TT has it, nor am I sure Block has it any more, but, at least at the time, every input I typed was on that report. I migrated that data (manually) to spreadsheet. Just to be clear, it's nothing to do with calculating taxes, just every last input to the program.

So, that sheet gets another column for the estimates (or exact) amounts for the future tax year. I have a hard copy, with the numbers for the most recently completed tax year quickly at hand all year long, so if something new that has tax consequences happens, I note it down on that sheet (it is just one sheet).

Perhaps the most challenging thing is the thing you've never done before (say, pulling from your 401k, as an example). You know they'll send you a 1099, but you might not know what code is in box 7, etc. So going through the interview might include a pause, while you come to ER forum to describe the situation and let us predict the codes and if boxes are checked, etc.

 

[PaunchyPirate]

I start my tax estimating process using the previous year TurboTax. TurboTax for the desktop PC permits you to create multiple tax return files that are stored on your local computer. Shortly after I filed 2019 taxes, I created a new tax file and called it "2020 Estimates". It was a copy of my 2019 tax file. I then edited it using TurboTax for any different situations/numbers that I knew would not apply in 2020. Through 2020, I modified the estimated file as numbers became clearer. Doing this helps me validate my MAGI estimation for ACA Health Care purposes.

In November, I purchase the latest version of TurboTax for the current year. I uninstall the previous version and install the new one. Then I create a new tax file by importing the actual filed version from last year (so that it has the proper starting numbers/carryover amounts/etc. that it needs. Then I continue to input estimated numbers until the real ones come in. You can always create multiple tax files. I sometimes create a couple of them to compare results of multiple financial decisions I may want to take.

In April, when I file my actual taxes, I usually abandon all my estimation files and start a new file again -- importing the previous year filing as it's starting point. Then I work on that file with real numbers only. I keep my estimated files in case I want to compare to them. You can open/close/edit these multiple files easily using TurboTax. I ultimately submit my taxes, print out paper copies for myself and then delete all my estimation files and only keep the one I submitted to the IRS.

Lather, Rinse, Repeat for the coming year.

Note: This approach requires you to creatively save/name your multiple tax files so that you keep track of what purpose they serve. TurboTax lets you do that.

Note: To actually delete a TurboTax file, you need to delete the file outside of TurboTax (using Windows File Manager). So you need to pay attention where they are stored and be familiar with Windows navigation and deletions. Be careful not to delete the file that actually supports your filed taxes!

 

[PatrickA5]

Does doing this mess up the 2020 tax return or is it "locked in" when you submit it?

Completely separate return.

 

[PatrickA5]

I start my tax estimating process using the previous year TurboTax. TurboTax for the desktop PC permits you to create multiple tax return files that are stored on your local computer. Shortly after I filed 2019 taxes, I created a new tax file and called it "2020 Estimates". It was a copy of my 2019 tax file. I then edited it using TurboTax for any different situations/numbers that I knew would not apply in 2020. Through 2020, I modified the estimated file as numbers became clearer. Doing this helps me validate my MAGI estimation for ACA Health Care purposes.

In November, I purchase the latest version of TurboTax for the current year. I uninstall the previous version and install the new one. Then I create a new tax file by importing the actual filed version from last year (so that it has the proper starting numbers/carryover amounts/etc. that it needs. Then I continue to input estimated numbers until the real ones come in. You can always create multiple tax files. I sometimes create a couple of them to compare results of multiple financial decisions I may want to take.

In April, when I file my actual taxes, I usually abandon all my estimation files and start a new file again -- importing the previous year filing as it's starting point. Then I work on that file with real numbers only. I keep my estimated files in case I want to compare to them. You can open/close/edit these multiple files easily using TurboTax. I ultimately submit my taxes, print out paper copies for myself and then delete all my estimation files and only keep the one I submitted to the IRS.

Lather, Rinse, Repeat for the coming year.

Note: This approach requires you to creatively save/name your multiple tax files so that you keep track of what purpose they serve. TurboTax lets you do that.

Note: To actually delete a TurboTax file, you need to delete the file outside of TurboTax (using Windows File Manager). So you need to pay attention where they are stored and be familiar with Windows navigation and deletions. Be careful not to delete the file that actually supports your filed taxes!

I do something similar, but don't uninstall old TT. I find it nice to be able to say go back to 2014 TT and see what I had at that point. A little easier than finding my printout.

 

[jollystomper]

While I use H&R Block, my approach could be used with Turbo Tax. I copy from last years return to create a new return. Much of the data I need I can extract from Quicken. In some cases I create "fake" tax forms (like W2s, 1099,etc) from this data and use that as inputs. As I receive the real forms I update the inputs and get rid of the fake form. In all cases I put an asterisk next to names of tax input forms in the program as another reminder that I do not yet have the real data, and remove the asterisk when the real data is entered.

 

[sengsational]

I forgot to mention earlier, that, at least in H&R Block, there's a checkbox for entries that are estimates. When you get to the submission step, there's a report that highlights all of the estimates. So if you're worried about accidentally submitting an estimate, check the box upon entering an estimate.

 

[misanman]

I only enter numbers that are final. I have a spreadsheet that calculates my federal and state taxes so I use that for planning. Last year it was within $100 of the Turbotax result so I feel confident using it for planning purposes.

 

[ncbill]

I just imported from last year...many of my numbers will be available by mid-January, so most of the data will go in then.

 

[Souschef]

I only enter numbers that are final. I have a spreadsheet that calculates my federal and state taxes so I use that for planning. Last year it was within $100 of the Turbotax result so I feel confident using it for planning purposes.

I agree, because until you get the 1099's you have no clue as to year end distributions. Also, TT does not have the latest 1099 input sheets yet.

 

[SecondCor521]

I have always waited until I received the actual numbers before inputting into Turbo Tax (in Feb/Mar). I've noticed some folks in this forum are talking about putting numbers in now. For those of you who do input early:

1. are you only inputting numbers you know for sure?
2. If you are inputting estimates, isn't it hard to keep up with what numbers in TT are real and which are estimates?
3. I assume the benefit is getting an early estimate of your tax situation?
4. If you input numbers early, does it cause problems when you want to import actual numbers/forms later?

I just want to understand to see if I am missing out on something. thanks,

1. I do volunteer tax preparation, so there is a practice area where I can start a mock 2020 return now; I'll do my real return in the production area. I also have a spreadsheet where I have two columns: an estimated column and a final column. I estimate in the first column until the number becomes final, then I copy it to the final column.

2. A little bit. I really only focus on my return down through the AGI line, and that's only 10 numbers or so, and I usually can just remember which ones are real and which are estimates. The spreadsheet with the two columns method helps. I also have to try to remember which data I've transferred from the spreadsheet to the practice area.

3. The key benefit for me is doing tax planning. It's all well and good to put your taxes together in the spring, but it is even better to be able to realize LTCG and/or Roth convert, contribute to 529s, etc. in a thoughtful way rather than just live with however things happened to turn out. Besides IRA contributions and recharacterizations, most of the opportunity to affect one's tax return goes away 12/31.

The key thing I focus on is deciding how much income to realize, and of what nature. This year I decided to realize enough income to sop up all of my nonrefundable tax credits. I decided to realize LTCG to fund my living expenses for a while, and Roth convert the additional amount needed.

I also have a couple of tax moves that I do every year, and this is when I review my notes to make sure I've taken care of those items during the year sometime.

Finally, in my case I have fledgling adult offspring who may or may not be dependents on my return in any given year. Figuring that out now enables more tax planning related to them.

4. No, because as noted above, I do my real return in a completely different area of the software.

 

[RunningBum]

I like printed copies of all my 1099s, and I put a check mark on them when I've entered them in TT. So I have a TT entry but no check mark, I enter the real amount, or just check mark it on the paper if my estimate matched.

Another way would be to use unique and easy to identify names for the estimates like EST Vanguard. When I enter the real Vanguard info I could delete the estimate entry.

I double if not triple check my entries, so I think I'd catch anything like this, but it's a good point to be careful, and have some system to tell real from estimates.

 

[Amethyst]

This is my first time doing our taxes instead of having a CPA do them. I put in our pensions (known), withholding (known), and best estimates of taxable investment income (based on VG and T. Rowe Price's year-end distribution estimates). I wanted to see whether we needed to send the IRS anything extra before the end of 2020, to avoid a penalty.

I entered all the numbers by hand; will erase my entries and attempt to import the 1099's when they arrive. These programs are just spreadsheets with a user interface. They let you edit your entries at will.

I have always waited until I received the actual numbers before inputting into Turbo Tax (in Feb/Mar). I've noticed some folks in this forum are talking about putting numbers in now. For those of you who do input early:

1. are you only inputting numbers you know for sure?
2. If you are inputting estimates, isn't it hard to keep up with what numbers in
TT are real and which are estimates?
3. I assume the benefit is getting an early estimate of your tax situation?
4. If you input numbers early, does it cause problems when you want to import actual numbers/forms later?

I just want to understand to see if I am missing out on something. thanks,

 

[Animorph]

I forgot to mention earlier, that, at least in H&R Block, there's a checkbox for entries that are estimates. When you get to the submission step, there's a report that highlights all of the estimates. So if you're worried about accidentally submitting an estimate, check the box upon entering an estimate.

This is in TT as well. I use this all the time if I want to enter something that is not a final number or want to revisit that number later. For PC's it's just a right click and a popup menu selection.

All numbers tagged as estimated will show up in the review process, so they won't be forgotten. You can change them at any time.

 

[audreyh1]

Didn’t know about that handy feature!

 

[Golden sunsets]

I’m using my own spreadsheets though. And having to estimate income I haven’t received yet, and guess at foreign tax credit and what percent are qualified divs.

This. I've been using H&R Block each year for this reason. I don't even file our own taxes-we have an incredibly reasonably priced CPA do our taxes and file for us. I use the tax software to get as close as possible to our actual tax liability and finalize our payments in December based on the tax software. It's worth the $30 to us.

The hard to find info as Audrey points out is Qualified vs Ordinary percentages of the funds we own and the Foreign Tax credits. Vanguard is good on the former. I shares and SPDR, not so much. And I have yet to find a source for Foreign tax credits before the 1099 comes out, so I rely on last year's percentages.

 

[Alan]

Even without the forms (1099s etc) I know exactly what my income is from the various sources before end of December so I enter the figures so I know how much to adjust my final estimated tax payment, due mid January.