Case Study 1: Estimated taxes

Let's see how our volunteer helped a taxpayer, Ernie, with the Payments section.

Taxpayer who overpay their income taxes in one year can apply all or part of their overpayment to the next year's tax. This is done by indicating on their return the amount to the next year's tax estimated tax.

For more information about estimated taxes, refer to Form 1040-ES, Estimated Tax for Individuals. Estimated tax payments for 2024 are due on April 15, 2025, June 15, 2025, September 15, 2025 and January 15, 2025.

Note: Taxpayers don't have to make payment due January 15, 2025 if they file their 2024 tax return by January 31, 2025, and pay the entire balance due with your return.

Volunteer says:

Ernie responds:

The software added up all the income tax withheld from your Forms W-2 we entered earlier. I know you had a little self-employment income and I see you responded "yes" to the question on estimated tax payments on the intake and interview sheet. Is that correct?

Yes, I did.

Do you have a record of your payments, perhaps on a Form 1040-ES?

Yeah, here it is.

Good, you paid each quarter. We'll enter those payments. While we're here, did last year's return show an overpayment?

Yes, here it is: $150.

Did you apply any of that overpayment to this year's tax return?

Yes, all of it.

Okay, we'll enter that too. Now we show the total of the withholding from your Forms W-2, your estimated tax paid and the refund amount from last year's return applied to this year.

Good!

Payments Workout

Amounts Applied from Previous Year

Case Study 1: Estimated taxes