My husband sold his business in March 2023 that he was running as a sole proprietor. He has paid estimated taxes in the previous years. We're not sure if we need to this year. He has a small amt of income that will report on a 1099 this year. But we are getting some income from an annuity that withholds taxes. Is it necessary to pay estimates this year?
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Hi,
If you expect to owe more than $1,000 in federal taxes for the tax year, you may need to make estimated quarterly tax payments using Form 1040-ES, or else face a penalty for underpayment. This article explains more and talks about the safe harbor (which I have recapped below).
To determine whether you need to make quarterly estimates, answer these questions:
If you answered "no" to all of these questions, you must make estimated tax payments using Form 1040-ES. To avoid a penalty, your total tax payments (estimated taxes plus withholding) during the year must satisfy one of the requirements we just covered.
To do a deeper dive on your personal situation, you may wish to reach out to a live tax expert at Intuit (https://turbotax.intuit.com/personal-taxes/online/live/) or provide more specific details in a follow up message.
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Best,
Karen
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