How is your Estimated Tax Due amount calculated?

Tax tools are available with a subscription to GoDaddy Bookkeeping.

GoDaddy Bookkeeping makes it easy for you to keep tabs on your total estimated tax amount due.  Remember that your business has only one tax bill for the entire year that is based on your profit for the entire year.  But spreading it out over quarterly payments makes good sense:  you'll be able to stay on top of things and won't be overwhelmed by one huge tax payment.  

GoDaddy Bookkeeping's "Estimated Taxes" sub-tab contains data that will help you know what the IRS might expect from you in any given quarter, based on your profit so far for the tax year.  This is why it's called Estimated Taxes Due -- key word being ESTIMATED. The numbers are just estimates in the short-term, since the exact amount won't be known with precision until December 31 of any given year. 

Let's look at the example below.  Here we have somebody who has paid a total of $251.97 in taxes for the year, and whose tax liability is currently at $231.18This means the TOTAL amount of her tax bill for the year so far is $483.15.  Broken down, this amount contains amounts and percentages for Social Security taxes, Medicare taxes and Income taxes that are set by the IRS (see the hover bubble in the image below):

 

taxDue.png

 

2013 Taxes ESTIMATED

TOTAL Social Security due to-date:   $244.19

TOTAL Medicate due to-date:            $ 57.11

TOTAL Income Tax due to-date:        $181.86

_____________________________________

TOTAL Tax Liability for 2013 to-date:  $483.15

 

As we can see above, she has paid $251.97 for the year, leaving her with a tax liability for the year of $483.15.  

If during Q2 she makes a payment to the IRS for $231.18 and records it in GoDaddy Bookkeeping, the number under "Estimated Taxes Due" will return to $0 temporarily, but it may increase if she has a really great and profitable Q3.  Keep in mind that recording the payment in GoDaddy Bookkeeping does NOT send a payment to the IRS.  You'll still need to do that in whatever way you usually make payments.

All in all, GoDaddy Bookkeeping's Estimated Tax Payment system can keep you from being surprised about what the IRS might be expecting from your business at any given time.  

Also note that these numbers are never conveyed directly to the IRS; GoDaddy Bookkeeping respects your privacy and does not share or sell your confidential business data with anyone. 

Finally, if you're wondering where to send your estimated tax payment, check out this article from the IRS: http://www.irs.gov/pub/irs-pdf/f1040es.pdf, page 4.

Have more questions? Submit a request

Comments

Powered by Zendesk