Where is the Estimated Taxes section located in GoDaddy Bookkeeping?
Estimated taxes are located under the Taxes tab under a sub-tab called Estimated Taxes. Please see the screenshot below for what that looks like in the application.
How do I record an Estimated Tax payment?
You can record payments for your Estimated Taxes using the "Record a payment" button located on the Estimated Taxes page. More information on how to record an Estimated Tax payment can be found in this article.
How are Estimate Taxes calculated in GoDaddy Bookkeeping?
Since every person's tax situation is different, we cannot provide an estimated tax calculation that is guaranteed to be 100% accurate. Instead, we provide a conservative estimate based on the following:
- We calculate your businesses profit year-to-date
- We then calculate the self employment tax (which consists of social security and medicare contributions) using the latest IRS rates
- To the self-employment tax, we add your business income tax. For this, we simply use the marginal tax rate based on the profit to date. For businesses earning higher income, this may result in a higher tax payment than using the average rate, but we figure it's better to be safe than sorry
Also, another thing to keep in mind is that we can only calculate your taxes based on information entered in GoDaddy Bookkeeping. If you have multiple businesses or perhaps a "day job", Bookkeeping will not take this into account.
Here is an example of that how that works in the application:
- You made $10,000 of profit for Q3 of this year
- From your profit of $10,000, you are are charged 12.4% (or $1,240) for Social Security Tax, 2.9% (or $290) for Medicare Tax, and 9.4% (or $939) for Income Tax
- Your end tax liability in Estimated Taxes for Q3 is $2,469 or the sum of all the taxes listed above
- You record your payment for $2,469 anytime on or before the Q1 due date of September 16th, but after the previous quarter's due date of June 17th
Note - Due dates are subject to change based on your current tax year. Please see this article for information on the due dates for your Estimated Taxes for your current year.
Here is a screenshot of that calculation in the application:
If you would like additional information or the actual calculations/formulas, feel free visit the IRS website. This link is for the 2013 information which can be found at the bottom of page 7.
What if I have a balance due left from a previous quarter?
The current amount due in Estimated taxes looks at your tax liability from your current quarter and any unpaid Estimated Taxes from previous quarters in the year. Therefore the total amount due for your current quarter will always be a total of all your unpaid Estimated Taxes minus all Estimated Tax payments made for the current and previous quarters of the year.