Estimate quarterly taxes tips and information
Whatever the reason is, the process to estimate your quarterly taxes really is not that difficult. There will be some items you will need in order to get the most accurate estimate. However, for the most part you will find this is a relatively painless process.
As a responsible person living in the United States you are aware that in order for you to help support the Federal and State Government you will need to figure what amount you will need to pay for your taxes.
With this in mind, there is a little variance in the name of quarterly taxes. This is because there is some difference in when the quarterly taxes need to be paid. Here is a schedule to keep in mind for future reference.
The schedule provided by the IRS is as follows:
This type of schedule is very different from the taxes you would pay if you were an employee of a company. Those taxes are removed from your paycheck based on your deductibles and the income you make.
The way to calculate what you will need to pay on these different dates will be where your estimation of quarterly taxes will come in. Again this is an estimate and will need to be completely accurate.
The easiest way to calculate this is by using your income from the previous year, then splitting that amount up into four equal amounts. Then you would take that quarterly amount and times that by 1.10. Then that amount over the actual income would be what you would need to pay taxes on.
Here is a short example of what it would look like.
There is one variance in this that will need to be taken into consideration and that is if a couple makes over $150,000 then instead of you using 100% of your income, you will want to divide 110% of your income to come up with the full amount.
You will find that paying your taxes by estimating the quarterly taxes, and paying this money on the Federal schedule will help to prevent large lump sums from having to be removed from your income all at one time. Therefore you will have to practice self-discipline when it comes to setting aside the correct amounts of money if you will want to correctly follow the quarterly schedule.
If you are running your own small business, you will want to remember that as a sole proprietor you are responsible for those taxes regardless. Therefore since as a sole proprietor your business and family income are as one, the government can get the taxes by liquidating your family's assets, and possessions. With this in mind you can see the importance in paying your taxes quarterly in order to keep up.
This is how to estimate your quarterly taxes. These tips and different information will hopefully help to increase your knowledge and confidence at tax times. However, keep in mind that it is always a good idea to get the help of a professional in these circumstances.