Estimating Quarterly Taxes

DedicatedDriver, my suggestion is if this is your first return or estimated taxes you are filing. I personally have had a tax accounted prepare my taxes.
Yes with enough time you can do them yourself. BUT taxes are so complicated I have a tax professional prepare mine. Company and personal.
My tax preparer is also a tax attorney. IF and when I have to go to an audit it will be less stressful having a person familiar with my business than getting someone fresh to help.
Also by using the same firm for all my taxes state, federal, Unemployment and payroll, They will represent me free, it is included in the service I pay for. Which is approximately $250 for each return each year, State and Federal for each entity. $500.00 Really cheap compared to paying for an attorney to help with an Audit.
Yes I can find cheaper places HR Block. TurboTax.
These cheaper prices don't come with stress of knowing the returns are correct.
At the very least you should have a professional do them the first year and that gives you the answers to all your questions. Just copy the returns the following years with the corrected numbers. BUT you must keep current with any changes in the tax code that happen during the year.
Good luck.

 

PS. your estimated returns you should have been filing during the year of your income.
It may be different for the first year of business. I don't remember.
Good luck.

 

I am no tax expert by any means. What I did was take my TOTAL income from January through March. Then I subtracted the TOTAL expenses that I had for the same period. Since this is the first quarter, take a % of the end sum and write a check. I don't know the exact formula for the end $ amount. Rule of thumb for me at this point is $2200.00. There are plenty of people out there willing to put in their 2¢ , just search and see the end results. What ever u do make sure u have a savings account just for taxes. Nothing like getting into your operating account to pay the taxes. Murphy always seems to find u. Good luck.

 

Want some sage advice?

Get someone (an accountant) to do all of that for you and have them explain it how to stay legal and not trigger an audit.

I pay to have it done because I have enough on my plate and this is one area I don't want to spend hours trying to figure out - time is money. The more time you waste on things others can do, the less money you make.

 

Very well put. I'm not going to waste time crunching numbers. I've got too much stuff to grease and miles to run. My guy told me to make the money and let him worry.

 

The one thing I learned a long time ago is you hire people to do a job for you, while it is great to learn and all that, if you spend money, you makes money because it frees you up.

 

One of the easiest ways to stay within bounds of estimating period tax payments was given me by an accountant a few years ago.... in most situations, using a formula of 7.5% of GROSS revenue as your basis will usually get you in the ballpark. It has worked pretty well for me. Sometimes a little short when tax returns done, sometimes over. As long as one pays at least 90% of what their tax levy was the previous year, they are in good standing with the IRS.

For each consecutive year, I look at my tax bill for the previous year, and divide that by 12 months, then use that monthly figure to estimate my estimated tax for each period of the current year. 3 mo for the first period (Jan-Mar paid in Apr), 2 mo of the second (Apr-May paid in June), 3 mo for the 3rd (Jun-Aug paid in Sept), and 4 mo for the 4th (Sept-Dec paid in Jan).