Different Safe Harbor calculations based on 2022 Federal AGI and State Tax paid

[jwkimd]

Currently, the Safe Harbor calculation (Summary D53) is only accurate if your Federal AGI prior year (2022) was more than $150,000. If the Federal AGI is less than $150,000, it should be the lesser of:

• 90% of what is actually owed for 2023 Federal Tax in 1040
• 100% of the amount paid for Federal Tax prior year (2022) (110% if your 2022 Federal AGI is more than $150,000)

On the state level, while it is different from state to state, they generally have this rule to take the lesser of:

• 90% of what is actually owed for 2023 State Tax
• 100% of the amount paid for State Tax prior year (2022)

On a different note, California does have its own rule depending on prior year's (2022) AGI, though it's generally the same rule as Federal.

If 2022 AGI > $150,000 but less than $1,000,000, take the lesser of:

• 90% of what is actually owed for 2023 State Tax
• 110% of the amount paid for State Tax prior year (2022)

If 2022 AGI > $1,000,000:

• 90% of what is actually owed for 2023 State Tax

Today, I make these manual change to do this - perhaps it can be implemented on the next version

• Add two more fields on the Summary sheet Inputs (W2 & 1040) field for the following: 2022 Federal AGI, and the 2022 State/Local Tax Paid
• Use this formula to calculate Federal Safe Harbor: =IF(2022FedAGI>150000,MIN(0.9 * ActualFedTaxOwed,1.1 * 2022FedTaxPaid),MIN(0.9 * ActualFedTaxOwed,2022FedTaxPaid))
• I'm using VA rules, so I use this formula to calculate State Safe Harbor: =MIN(0.9 * ActualStateTaxOwed,2022StateTaxPaid)

[hickeng]

Thanks for the distillation!

I went with the worst case calc with minimal info given overestimating is better than underestimating for this use, and the estimate is inherently a rough ballpark only because I'm not implementing the IRS worksheets for a true calc.

I'll add the more granular calc to the backlog.

There's also this clause in CA rules which, I think, means you cannot use 2022 AGI based limits at all if 2023 gross goes over 1M (single) or 500k married filing separately.

Taxpayers with 2023 California adjusted gross income equal to or greater than $1,000,000 (or $500,000 if married/RDP filing separately), must figure estimated tax based on their tax for 2023.

There's enough people asking about RSUs from a decade ago that some people will be hitting that threshold.