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Subject Author Date
Turbo Tax Gotcha: January Estimated Tax Payments Walt Bilofsky 02-24-2007
Posted by Walt Bilofsky on February 25, 2007, 9:08 pm
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>> Just checking here to ensure we're not making a misunderstanding about
>> timing - A "4th quarter" payment made in January doesn't count for Federal
>> purposes in calendar year 2006, does it?
>
>But a fourth quarter federal payment made in January would apply to
>the 1040 as well. You are correct about the state regarding a
>schedule A deduction. It should show up on the state return as a
>current year estimated payment.

And next year, Turbo Tax should import it from Quicken as a deduction
on the 2007 1040 - or maybe carry it forward from this year's TTax if
you enter it.

The issue is getting TTax to apply my January 2007 federal estimated
payment toward my 2006 federal tax liability, and the state payment
toward my state tax.

Which brings up another interesting issue. If you get a state refund,
TTax tries to tax it as federal income even if you were in Alt Min Tax
the year you paid it. However, although TTax doesn't do the math for
you to exclude it, it does catch the situation and flag it as an
incomplete form. It's up to you to recompute the previous year's
return without the deduction, which is easy enough if you have TTax.
So kudos to TTax for catching this one. I believe that previously
they did not flag it, just casually mentioned in the help that you
needed to fill it in.

- Walt

Posted by L on February 26, 2007, 11:57 am
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>> Walt Bilofsky wrote:
>> > Another tax time reminder:
>>
>> > If you import your data into Turbo Tax from Quicken, and make
>> > estimated tax payments - Caution: Check your Tax Payments Worksheet.
>>
>> > TTax imported my 2006 payments into the Tax Payments Worksheet. But
>> > it didn't import any payments I made in 2007.
>>
>> > I had to enter them by hand into the Tax Payments Worksheet.
>>
>> > IMO Turbo Tax should either import these payments, or at least show it
>> > as a form error to remind you to enter it yourself.
>>
>> Just checking here to ensure we're not making a misunderstanding about
>> timing - A "4th quarter" payment made in January doesn't count for
>> Federal
>> purposes in calendar year 2006, does it? It does for my state, but the
>> payments for Federal State purposes on Sch "A" are for those made in a
>> *calendar* year I believe. Of course, it still should be included for
>> the
>> state return as mentioned, so perhaps it is a problem if not included in
>> the
>> import...but did you check the State return to see if it shows up there?
>>
>> --
>> -------------------------------------------------------------
>> Regards -
>>
>> - Andrew
>
> But a fourth quarter federal payment made in January would apply to
> the 1040 as well. You are correct about the state regarding a
> schedule A deduction. It should show up on the state return as a
> current year estimated payment.
>

Quick question... what about any estimated payments made in JANUARY 2006?
Did THOSE get transferred?



Posted by Walt Bilofsky on February 26, 2007, 2:23 pm
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>Quick question... what about any estimated payments made in JANUARY 2006?
>Did THOSE get transferred?
>
I assume you mean did a state estimated tax payment for 2005, made in
Jan. 2006, get imported to serve as a federal deduction for 2006?

Yes, but Turbo Tax shows its source as being from the Carryover
Worksheet. Had I not used Turbo Tax for last year's return, I don't
know if it would have imported it from Quicken or not.

Turbo Tax users should check the Tax Payments Worksheet to see that
all estimated payments, state and federal, have been properly
credited. Payments for prior years are down at the bottom.

Posted by Andrew on February 26, 2007, 6:30 pm
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Michael Rosen wrote:

> But a fourth quarter federal payment made in January would apply to the
> 1040 as well.

But to be clear again, this is true only if made in the SAME calendar year,
I believe. A 4th quarter payment made in January 2007 for t/y 2006 does NOT
get reported in t/y 2006 Federal 1040 Sch A. It DOES count for the state
t/y 2006 (at least for my state of New York).

The 4th quarter payment made in January 2006 for t/y 2005 gets reported on
the 1040 for Federal t/y 2006.

(Some people make sure they make the 4th quarter payment in DECEMBER to
avoid having to remember this!)

R.C. - right??

--
-------------------------------------------------------------
Regards -

- Andrew



Posted by Walt Bilofsky on February 26, 2007, 9:16 pm
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>Michael Rosen wrote:
>
>> But a fourth quarter federal payment made in January would apply to the
>> 1040 as well.
>
>But to be clear again, this is true only if made in the SAME calendar year,
>I believe. A 4th quarter payment made in January 2007 for t/y 2006 does NOT
>get reported in t/y 2006 Federal 1040 Sch A. It DOES count for the state
>t/y 2006 (at least for my state of New York).
>
>The 4th quarter payment made in January 2006 for t/y 2005 gets reported on
>the 1040 for Federal t/y 2006.
>
>(Some people make sure they make the 4th quarter payment in DECEMBER to
>avoid having to remember this!)
>
>R.C. - right??

Estimated payments get reported in two places:

1) The state payments are reported as a deduction on federal Sch. A.
State payments made in January 2007 are deducted against your 2007
federal taxes. (Turbo Tax handles this OK.(

2) As a credit against the tax you owe. In this case, the 4th
quarter (federal and state) payments made in January 2007 for t/y 2006
get credited against your (federal and state) tax for 2006. (Turbo
Tax does not import this properly from Quicken; you have to enter it
through the interview or directly on the Tax Payments Schedule.)

What you say is true as regards item #1 - the state payment as a
federal deduction.

What Michael says is true as regards #2 - the January federal payment
applying as a credit against the previous year's federal tax due.

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