Help Me Calculate My Estimated Taxes

Most small business owners are required to pay estimated taxes on a quarterly basis.

Why you ask?

The IRS requires a "pay-as-you-go" tax system, meaning that all taxpayers are required to pay their taxes throughout the year and not just at the end with their tax return. Most employees accomplish this through withholding on their paychecks.

For those individuals who do not have enough withholding or none at all, as is the case with most self-employed business owners, the IRS requires that estimated taxes be deposited on a quarterly basis.

The idea is that all of the estimated tax payments added to the total withholding for the year will approximate the total tax calculated when you prepare your tax return at the end of the year. If the totals are the same, then you will not owe any money with your tax return at the end of the year. If you do not pay enough estimated taxes, then the IRS will charge you a penalty for underpayment.

The difficult issue is that the numbers for next year are not available so you must estimate the amounts in order to determine how much you should pay. The Tax Resource Center Estimated Tax Calculators will help you determine the amount you should send to the IRS.

The difficult part for many of them is determining how much to pay. Tax Resource Center has developed three online calculators to help you figure out what you should pay. Two of the calculators are based on information from last year's tax return and the third is based on your estimates of income and expenses for the current year.

The overall goal of your estimated taxes is to pay enough in quarterly payments so that the IRS does not assess any underpayment penalties when you file your tax return.

Tax Resource Center has three ways to calculate your estimated taxes:

Quick Estimated Tax Calculator

Calculate your Quick Estimated Tax Payments based on your lasst year's actual tax return and your anticipated tax withholding for this year, to determine the minimum quarterly payment you need to make to avoid any underpayment penalties.

Detailed Estimated Tax Calculator

Calculate your Detailed Estimated Tax Payments based on this year's expected income and expenses. These estimated amounts should provide adequate tax payments so that your total tax liability is deposited to the IRS on a quarterly basis.

Safe Harbor Estimated Tax Payment Calculator

Calculate your Safe Harbor Estimated Tax Payments based on your last year's actual tax return to determine the minimum quarterly payment you need to make to avoid any underpayment penalties.