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Recommended Estimate Payments Don't Match Previous Year Tax Liability

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Level 2

The estimated payment amount that is listed on the Client Letter adds up to more than 100% of the prior year tax liability.  Any idea why the software suggests more?  It isn't a lot more, but the 2019 tax was $311,931, but the Client Letter says to pay in $83,300/quarter or a total of $333,200.  Why would it do that?

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Level 12

AGI is over $150,000, which means it uses 110%

Also, some credits adjust that amount.

 

View solution in original post

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Level 12

AGI is over $150,000, which means it uses 110%

Also, some credits adjust that amount.

 

View solution in original post

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Your client's safe-harbor estimates are 110% of prior year tax, because they have AGI > $150k.

You might want to review the Form 1040-ES instructions, where that information appears.