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Automatically estimate your income tax in QuickBooks Online

by Intuit Updated 4 months ago

Learn what federal self-employment taxes are and how, if you’re a sole proprietor, QuickBooks Online automatically helps you estimate your federal tax payments.

If you're self-employed, you probably need to pay federal self-employment taxes. These payments cover your income, Social Security, and Medicare taxes for your self-employed work.

See your tax estimate

Everything you track for your business automatically gets calculated in an income tax estimate that you can check any time. 

This tool is only a rough guide and isn’t meant for complex situations, but it can help plan ahead for many common tax situations. Be sure to consult a tax professional for complete and accurate information. 

  1. Sign in to QuickBooks Online.
  2. Go to Taxes, then Income Tax
  3. Select Tax estimate. The total amount you might owe for federal income and self-employment tax is at the top. Select any number to see details on how it was calculated, the rates used, and more.

How QuickBooks Online calculates your taxes

QuickBooks gives you an estimate for federal income and self-employment tax. This is calculated by applying income tax rates to your total self-employment taxable profit from your business plus any personal income you entered from outside your business. Self-employment tax is calculated by applying Social Security and Medicare tax rates to your business taxable profit.

Here’s what you can do to get a more accurate estimate:

  • Add all of your business income and expenses and categorize them in QuickBooks Online or in QuickBooks Solopreneur
    • QuickBooks adds up your self-employed income. Then it subtracts any expenses and deductions you can write off. This gives you your business's profit. Plus, QuickBooks uses your current profits to estimate your income for the rest of the year.
  • Fill out your tax profile: Go to Taxes, then Income Tax. In the Download tax summary dropdown, select Tax profile
    • Here, you can add up and enter any income from outside of your business that is taxed at ordinary income rates (such as wages, salary, etc). 
    • Don't include income from more complex tax situations where income might be taxed at different rates (such as long-term capital gains from the sale of stock, certain retirement income, etc.). The tool doesn't currently support estimating tax on income outside of your business that could be taxed at different rates.

QuickBooks only calculates federal estimated quarterly taxes. It doesn't calculate other types of taxes, such as:

  • State income taxes (learn more about state self-employment taxes)
  • Sales tax (learn more about sales tax in QuickBooks)
  • AGI phase-outs and alternative minimum tax (AMT)
  • Children's interest
  • Medical expenses, stock payouts, and 401(K) draws
  • One-time lump-sum distributions
  • Special-cases standard deductions (if you're blind, over 65, etc.)
  • Tax credits

If you need to calculate other types of taxes, you can calculate them in TurboTax. If you have complicated taxes, we recommend working with an accountant.

Review and start a quarterly tax payment

Review the IRS website for the most up-to-date quarter schedule and payment deadlines. When you're ready, QuickBooks can help you file your business taxes.

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