IDK how much this matters but I am in the US.
How much to people take out in quarterlies? I am trying to dump QB Self Employed because I do not need the ACH feature anymore and they keep raising their costs. They also did the work of estimating taxes. 2020 ended up being 5k over.
Now I don't mind paying more in estimated taxes but Intuit is estimating 2k more than I paid last quarter which was 1k more than the previous quarter. That is ~30% of the amount I invoiced for three months...so basically a month of income. I am not even accounting for deductions like medical premiums and contributions.
I have a good idea what the year will look like now so if calculate the (annual/4)*.24 I get a number that is 3k less than Intuit's estimate. I could put that in sep and reduce 2020 taxes! So I am wondering if I am missing something. What percent of your quarterly *4 do you pay?
Trying to figure out estimated taxes is not straight forward. The easiest thing to do would be to take the numbers you project for the year and run a pro-forma tax return. Asking what someone else does won't be helpful, because there are too many moving parts.
If you (as an individual) have no other employment income, self employment taxes are 15.3% up to the Social Security wage base, and then 2.9% thereafter. If you yourself have other employment income that will reduce the Social Security taxes.
The Income tax itself is a progressive graduated amount, so some will be taxed at various amounts - 0% (standard or itemized deduction), 10%, 12%, 22% 24%, etc. depending on how much you make.
If there are other sources of employment income, that will push up the floor bracket to calculate on your self employment income. What's your filing status? Because employment income from a spouse needs to be taken into consideration.
Then you also need to consider income from other sources, not just business profit, as that adds to your income.
Also, will you be making contributions to a self employed retirement plan? that reduces your income.
Lastly, you may also need to look at various tax credits or additional taxes depending on your income.
I highly suggest you study how taxes work in order to be able to figure out your quarterly estimated payment needs.
This is definitely a tricky thing. I'm not paying extra quarterly but I'm paying extra estimated tax payments as I go depending on bonuses. I got a rude surprise at tax time this year. I just made my first payment based on last year's situation. I also filled out the IRS estimation form but it's a guessing game at this point. When I get into the last quarter of the year, I'll probably do what nolesrule suggested and fill out a tax return to make sure I'm close to the target. Either that of re-do the estimation form since I'll have more accurate data. Just need to get within 10% I believe to avoid penalties.