I have a small W-2 income and will have mostly 1099 income for 2019. I have an extra amount deducted from my W-2 income to offset my 1099 taxes. However, this year, I project to make a much higher income and need to estimate how much tax I should pay quarterly. I don't want to have underpaid when the 2019 tax season comes. I have searched the web and the IRS website trying to find a way to estimate it and it's just not very straight forward. Does anyone have a good formula for this?
1099 Income - Estimating quarterly taxes
- Thread starter tgmngis
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- 1099 commission income taxes
- 6,496
(Caveat, I am not an insurance agent or income tax accountant.)
I use H & R Block tax software to do my return. (I have never done a Sch C on this software, but I assume it will prompt for stuff like Sch C expense and your share of FICA Medicare tax). If I was faced with this question, I would copy my 2018 tax return into a 2019 estimate file.
I would start by taking what I expect to make in first qtr 2019, multiply by 4 and put that into the program, make any other relevant changes. I would see what the Annual Federal Tax is, divide by 4, round to nearest $100 and use that for first qtr deposit.
For second quarter, I would look at second qtr income, add to first qtr, and add what I thought were good guesses for q3 and q4. I would plug that new number in, see what the annual tax is, divide by 2, round to nearest $100 and subtract my q1 deposit to get the q2 deposit.
As time for q3 and q4 deposits rolls around, I would continue with that process. As long as there is no major change in tax rates from 2018 to 2019, that would get you quarterly deposits based on variations in quarterly income.
(And I based that answer on the concept that you wanted to have deposits that would try to capture your liability, not just avoid penalty.)
You can round some of the estimates up a bit for fudge factor if you don't mind overpaying and getting a refund.
I use H & R Block tax software to do my return. (I have never done a Sch C on this software, but I assume it will prompt for stuff like Sch C expense and your share of FICA Medicare tax). If I was faced with this question, I would copy my 2018 tax return into a 2019 estimate file.
I would start by taking what I expect to make in first qtr 2019, multiply by 4 and put that into the program, make any other relevant changes. I would see what the Annual Federal Tax is, divide by 4, round to nearest $100 and use that for first qtr deposit.
For second quarter, I would look at second qtr income, add to first qtr, and add what I thought were good guesses for q3 and q4. I would plug that new number in, see what the annual tax is, divide by 2, round to nearest $100 and subtract my q1 deposit to get the q2 deposit.
As time for q3 and q4 deposits rolls around, I would continue with that process. As long as there is no major change in tax rates from 2018 to 2019, that would get you quarterly deposits based on variations in quarterly income.
(And I based that answer on the concept that you wanted to have deposits that would try to capture your liability, not just avoid penalty.)
You can round some of the estimates up a bit for fudge factor if you don't mind overpaying and getting a refund.
Rob Lion
Guru
- 653
Thanks for reminding me i haven't paid my taxes shit lol.
- 6,496
Things are looking up.
You've gone from watching TV for an hour with a potential client to having taxes to pay!
- 2,639
The IRS has forms and instructions for figuring estimated tax:
https://www.irs.gov/pub/irs-pdf/f1040es.pdf
Or, you can send the IRS a blank check and let the IRS fill in the amount.
Just kidding.
https://www.irs.gov/pub/irs-pdf/f1040es.pdf
Or, you can send the IRS a blank check and let the IRS fill in the amount.
Just kidding.
