The Estimated Tax Report estimates your federal income and self-employment taxes based on IRS tax schedules for the current year. See Sample Report
You can use the report to estimate quarterly estimated tax payments if you are required to pay them. You could also use the report to see how much you may owe in taxes at the end of the year based on your business activity to date and even ask WorkingPoint to project your profit based on what you have made so far.
There are 3 options for how WorkingPoint will calculate profit/loss:
Estimate based on profit to-date (as of today) with "I expect my current level of income and expenses to be consistent for the remainder of [current year]" check box checked
By choosing this method, WorkingPoint will take the business activity recorded in WorkingPoint to-date and calculate your profit/loss to-date, and then use that figure to project what your profit/loss would be for the entire year based on the current rate of spending and earning you have done so far.
As equations, it looks like this:
[Revenue + Other Income] - [Cost of Sales + Expenses + Other Expenses] = Net Profit or Loss as of Today
(365/current day in year) x Net Profit or Loss as of Today = Projected Profit or Loss for Current Year
Estimate based on profit to-date (as of today)
If you asked WorkingPoint to use your profit as of today to estimate your taxes, WorkingPoint will take the income you have made for the year, that is, anything recorded to a Revenue or Other Income account, and subtract your expenses, that is, anything that has been recorded as Cost of Sales or Expense, to figure your Net Profit or Loss for Current Year.
As an equation, it looks like this:
[Revenue + Other Income] - [Cost of Sales + Expenses + Other Expenses] = Net Profit or Loss for Current Year
Estimate based on a value you enter for total profit for the current year in the field provided
By choosing this method, you can enter any amount for your estimated profit and WorkingPoint will use that value to calculate your estimated taxes. This value can be found by running an income statement for last year or by referring to the prior year's adjusted gross income from your tax return.
Using the Net Profit and Loss for the Current Year and your filing status (as selected on the report), WorkingPoint applies the current year's tax tables as published by the IRS to calculate your self-employment taxes and your Federal income taxes then adds them together to get your total estimated federal taxes owed for the current year.
As equations, it looks like this:
Net Profit and Loss for Current Year x IRS Tax Rates for Self-employment taxes = Self-employment tax
Net Profit and Loss for Current Year x IRS Tax Rates for Income taxes = Income tax
Self-employment tax + Income Tax = Total Estimated Federal Taxes Owed for Current Year
If you are required to pay estimated quarterly taxes, the IRS has set the dates that payments are due by. We have listed the payment due dates on the report. You may pay all of your estimated tax by April 15, for the current year or in four equal amounts by the dates shown below. However, you can make more than four estimated tax payments if you want.
1st payment - April 15
2nd payment - June 15
3rd payment - Sept. 15
4th payment - Jan. 15*
* You do not have to make the payment due January 15, if you file your tax return by February 1, and pay the entire balance due with your return.
|
|
Note: This report only estimates taxes and is intended to be used as a guide for cash flow planning only. The IRS Estimated Tax worksheet includes other deductions and calculations not included here. For Form 1040-ES and additional instructions on whether you are required to pay estimated quarterly taxes and how to calculate them, go to http://www.irs.gov/pub/irs-pdf/f1040es.pdf |
