 Income tax 2022-2023 payments. Let's do some wealth preservation with some tax preparation. Support a counting instruction by clicking the link below giving you a free month membership to all of the content on our website broken out by category further broken out by course. Each course then organized in a logical reasonable fashion making it much more easy to find what you need then can be done on a youtube page. We also include added resources such as excel practice problems pdf files and more like quickbooks backup files when applicable. So once again click the link below for a free month membership to our website and all the content on it. Most of this information comes from the form 1040 instructions tax year 2022. You can find on the IRS website irs.gov irs.gov looking at the income tax formula we're down here at the bottom of the formula finally with the tax payments remember and the first half of the income tax formula is in essence an income statement although a strange one where we have income minus the above the line deductions or adjustments to income to get to the subtotal of adjusted grossed income minus the greater of the standard or itemized deductions to get to the taxable income which is basically the equivalent of an income statements net income so that's the bottom line of the income statement component then we're going to be applying the tax calculation onto that taxable income not with a flat rate but with the progressive tax tables and so on and that's going to give us the tax before credits and other taxes so we're not done yet because now we have the credits that we need to deal with down below which could be broken out between the non-refundable and refundable credits as well as other taxes which might include the self-employment tax for example and that will then get us to our total tax and then we have to think about the payments that we have made as well as refundable credits notice that we had to break out these credits to the non-refundable and refundable components we'll talk more about the credits in a future presentation but they kind of muddy up the situation because the refundable credits are those types of credits that could take the tax below below zero so even if you don't have any tax that you still might be able to get a refund if you have those refundable credits that are applied out but here we're focusing in on the payments now just note that if this was like a perfect situation if it was a simple type of tax code the tax code is actually designed to be more similar to the reporting that you might see in a payroll reporting situation if you think about payroll when they report the 941s on a quarterly basis and the 940 at the end of the year then the reporting is usually just that reporting the payments have already been made in other words with payroll you pay the payments during or after the payroll and then when you process the the tax returns the 941s then it's just going to say hey here's my liability here's what I already paid if everything went smoothly those two things will be equal I will not have any refund or any added payment at the time I file the return the return is just an information return in that case the end of it the form 1040 is designed in a similar way they like they want to get paid during the year so we're talking tax year 2022 you're gonna have to pay them during the year either with withholdings from your w2 withholdings or with estimated payments you have to do that in order to avoid getting hit with penalties and interest and then when you file the tax return by April 15th or whatever of the following year this in this case 2023 in a perfect world the form 1040 would just be an information return like the payroll returns in other words we would calculate the actual tax and then we would say hey look this is the tax this is how much we have paid you and then we would have nothing that would be due or no no refund at that point in time it would just be an information return we cannot do that in practice because the form 1040 is way too complex the tax code is changing all the time and it's way too complex to be able to do that when we have a progressive tax system we have all these different kinds of deductions that are changing we have people that are working and changing they're working situation all the time and then we have these credits that are basically changing all the time therefore what we try to do is we try to overshoot how much we're gonna we're gonna be paying not just because we want to refund that's not the point it's not just like we want a celebration day for a tax day or whatever when we get a refund no we're trying to avoid the penalties and interest and we can't get it exact and we know if we underperform if we miss the target by it being too short we will get hit with added costs of penalties and interest on top of the tax that's why we shoot for a little bit over so that we can get a refund and avoid and avoid the taxes so that's the general idea all right so we're on the second page of the form 1040 we're in the payments section most people have the payments in the form of the withholdings from the w2's although if you have a schedule c business it's likely that you might make estimated tax payments which you have to do in a more conscious way you can also have withholdings from other things if you're retired for example you might have withholdings from the 1099 or or something like that from distributions from a pension or retirement plan of some kind all right so we have the payments line 25 federal income tax withheld line 25a forms w2 add the amounts shown as federal income tax withhold on your forms w2 so the most common tax form the form w2 box one has the income that helps us to calculate the actual taxes on the income and then box two i believe is the one that has the withholdings that's how much your employer took out of your pay already and that should be on the second page of the form 1040 as what you already paid in again in a perfect world those two things would basically match you would use box one to calculate your tax and then your tax hopefully would be equivalent to how much you paid in because you already paid it as you as you worked and you wouldn't get a refund or any amounts due but because of the complexity the withholding structure is typically designed so that you will withhold more substantially more than you owe so that you have a cushion so that you can avoid penalties and interest so the amount withhold held should be shown in box two of form 1040 attach your forms w2 to to your return so line 25 b forms 1099 include online 25 b any federal income tax withheld on your forms 1099 r note that if you're working with individuals and they're working years it's likely that they're going to have w2 forms because they'll be employees if you're dealing with people that are in retirement it's likely that your major forms that will be reporting income are the 1099 r distributions from retirement plans and so on and in that case you could do the withholdings from the 1099 r there might be withholdings from that form or they might structure their payment system so they make estimated payments so the amount withheld should be shown in box four attach your forms 1099 r to the front of your return in federal income tax was withheld so if you receive a form uh if you received a 2022 form 1099 showing federal income tax withheld on dividends taxable or exempt interest income unemployment compensation social security benefits railroad retirement benefits or other income you received include the amount withheld in the total online 25 b so these are more or less more unusual type of items or forms but remember that any kind of 1099 form is a form that usually is reporting some kind of income and you might have the option to have withholdings for those income forms as well but it's less likely that it'll be the case with these forms it's more likely of course with the w2 form and then the 1099 r which is usually going to be a bigger dollar amount of of in a bigger percentage of someone's income than some of these other 1099 forms so this should be shown in box four a form 1099 box six a form ssa 1099 or box 10 a form rrb 1099 line 25c other forms include online 25c any federal income tax withheld on your forms w2g and uh so the amount withheld should be shown on box four so if you got a w2g then if that's going to be a significant amount then you're going to want to report that uh you might choose to have withholdings for that income so for example if you if you did some gambling or something like that and you won a substantial amount of money that could be substantial for taxes then you might want to withhold on it or you might be required to withhold on it in some cases depending on the situation so that would be more kind of an unusual one so the amount withheld should be shown in box four attached forms w2g to the front of your return if federal income tax was withheld so if you had additional medicare tax withheld include the amounts shown on form 8959 line 24 in the total online 25c attached form 8959 include online 25c any federal income tax withheld that is shown on schedule k1 the schedule k1 is going to be a flow through type of form typically from from other taxable entities that are flowing through to your to your tax return your 1040 so also include online 25c any tax withheld that is shown on form 10 uh 42 s form 8805 or form 8288 a you should attach the form to your return to claim a credit for the withholding so then we have line 26 2022 estimated tax payments those now we have the estimated taxes so remember the two major ways that you pay the irs one is through the withholdings someone is paying you money and you withheld some of that money they took the money from you before you even got it in other words the most common example being the employer withholding money given it to the irs on your behalf the other way is that you make estimated payments typically on a quarterly basis most common in situations where you have a schedule c and secondarily most likely when you're retired or something like that and you're making estimated payments for the income that you might be getting from retirement instead of reporting to mona on the 1099 are withholdings maybe you make estimated tax payments so enter and enter any estimated federal income tax payments you made for 2022 include any overpayment that you apply to your 2022 estimated tax from your 2021 return or an amended return so when you look at your estimated tax payments it can be a little bit confusing to think about the cutoffs note that if you're just dealing with withholdings it's a little bit it's pretty easy because because it's being handled by your employer and they're going to be assigning the year the proper year so any payment that was in the tax year of 2022 the withholding related to it will generally be applied to tax year 2022 but when you have estimated tax payments then you want to make sure that when you're making the payment you're properly applying it to the proper year so you might have had like an estimated tax payment that that you made you know in a prior year that is for what's for 2022 that you made in 2021 or you might have a situation where you had a refund from 2021 and instead of receiving the refund you want to say I want you to keep that money IRS and just apply it to the 2022 estimated tax payments which is quite common when you have the estimated tax payments that also gets confused if there's an amendment to the return so for example if you did the 2021 return and there was like a thousand dollars that you would have gotten on a refund and you said IRS you can give me the thousand dollars but I'm just gonna have to give it back to you for my estimated payments for 2022 so you just keep that thousand dollar refund from 2021 and apply it to 2022 everything is fine but what if there's a change to the tax return either an amendment that you made consciously with a with a form 1040x or the IRS has a proposed change that changes that thousand dollar refund to something other than a thousand dollars like 800 or something like that well then you've got to make sure that you you're picking up the proper amount after the amendment that has been happened to to your payments that are happening in 2022 hopefully this will be easier to do once the iris gets better with their online portals so you can look at you can look at your information on your online iris account to see if any changes were made from your prior tax software because usually what happens is the tax software is going to be is going to be the thing that helps people roll over to see the estimated tax payment from 2021 to 2022 for example if the iris made a change and we just accept the change but don't input it into the tax software for the following year then you can see why you might end up with a mismatch between the prior year and the current year because there's been a change but and sometimes the client doesn't give the tax preparer the information to show the change that happened and so then you don't so then you have a mismatch of your of your payments but if we get to the point where it's pretty easy to look on the iris website for a particular for your account as a as a taxpayer and see what the estimated payments were as a matter of general practice that will catch a lot more of those those issues I would think so if you and your spouse paid joint estimated tax but are not filing separate income tax returns you can divide the amount paid in any way you choose as long as you both agree so you have a joint tax return then you're basically in this case and this you're you're kind of paying as though you are one in essence right because it's your joint tax payment so so and notice that gets a little bit messy when we think about like social security when we talked about social security has to be applied to the to the correct spouse to make sure the benefits are are being paid so it gets a little bit messy with the merit you would think people that are single and then they get married they would be treated as just one entity for taxes but we have some exceptions to that rule when you get to like the social security payments to make sure that they're being applied to like the proper the proper social security number for example but so if you can't agree you must divide the payments in proportion to each spouse's individual tax as shown on your separate returns for 2022 for more information you can see publication 505 be sure to show both SS ends and the space provided on the separate returns notice that this issue often comes up between spouses in a married couple situation because oftentimes the dividing of the of the work is going to be someone takes care of the house more often and then someone earns more revenue oftentimes and so you would and what happens is the person that earns more revenue is going to push people from taxes into a higher tax bracket so if another spouse is earning some revenue then they're going to then their revenue is going to be pushed up to the higher tax bracket than it otherwise would if they were if they were not working there and obviously then you have to think about how you're going to be breaking things up given the fact that that even though it's not income for federal income tax purposes you have work that's other than that like working for the home and that kind of stuff so it gets a little bit confusing to kind of figure what the proper withholdings should be for spouses that have different income levels and what the breakout should be for the for the refund who should get the refund and this and that can be somewhat of a confusing a confusing topic but usually it's better off as a whole to be filing married filing joint most of the time and then trying to work out what the best splitting and whatnot of the of the income and what the best withholding structure would be just to negotiate that situation so be sure to show both SSN social security numbers in the space provided on the separate returns if you or your spouse paid separate estimated tax but you are now filing a joint return add the amounts you each paid follow the instructions even if your spouse died in 2022 or in 2023 before filing 2022 return divorced taxpayers if you get divorced in 2022 and you made joint estimated tax payments with your former spouse enter your former spouses SSN social security number and the space provided on the front of form 1040 or 1040 SR if you were divorced and remain and remarried in 2022 enter your present spouses SSN social security number and the space provided on the front of form 1040 or 1040 SR also on the dotted line next to line 26 enter your former spouses social security number followed by DIV so name change if you changed your name and you made estimated tax payments using your former name attach a statement to the front of form 1040 or 1040 SR that explains all the payments you and your spouse made in 2022 and the names and social security numbers under which you made them