If I own a business and have an estimated annual income of $63,000. My Social Security tax is 12.4%, Medicare is 2.9%, and my estimated federal income tax rate is 22%. How much quarterly estimated tax must I send to the IRS for the first
quarter?
2006-10-12 04:47:34 · 5 answers · asked by dwali20 2 in Business & Finance ➔ Taxes ➔ United States
All the other answers assume your net taxable income is $63,000. If, according to your question, your total income is $63,000, then you subtract various things to get to your taxable income. For example, you subtract your standard deduction or Schedule A (whichever is greater), then your personal exemptions. Since you didn't tell us if you are married or how many dependents you have, we can't figure this out. In addition, you subtract half of your social security and medicare from your gross income. The final result is your taxable income. Heck, you may even qualify for other credits and such.
Worse case scenario...you are single with no dependents, deductions, or credits. Then, your quarterly payment should be around $4,650. But, just like the other answerer said, as long as you pay in 110% of last year's tax liability, you may still owe come tax time, but you won't pay any penalties.
It is best to do a practice 2006 tax return with what you know and see what your tax liability will be. Then, divide that number by 4 and pay it in each quarter. If you want to be conservative, add 5% to each payment. If you want to pay in the least possible, take the lower of your estimated 2006 liability or 110% of your 90% of your real 2005 liability and divide by 4.
Hope this helps. :)
2006-10-15 15:19:16 · answer #1 · answered by TaxMan 5 · 1⤊ 0⤋
To avoid a penalty you must pay 110% of prior year tax or 90% of current years estimated tax. You do not have to pay every quarter if you dont want to. If most of your income is not derived equally throughout the year you can adjust payments accordingly as long as you meet the threshold mentioned earlier.
2006-10-12 14:12:03 · answer #2 · answered by brenden b 2 · 0⤊ 0⤋
Four quarterly installments of $ 5,691.00. You will most likely be overpaid with this amount of withholding as by the time you work through your 1040 and reduce TI by one half of your fica and take dependency and exemption amounts your FIT should be lower.
2006-10-14 12:26:59 · answer #3 · answered by acmeraven 7 · 0⤊ 0⤋
$5875 quarterly - but it's really less than that, since it's not your entire income that gets taxed a 22%, but only part of it - most dollars are probably at a lower rate.
2006-10-12 15:51:59 · answer #4 · answered by Judy 7 · 1⤊ 0⤋
$5874.75
2006-10-12 11:57:55 · answer #5 · answered by Ashley 1 · 0⤊ 0⤋