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Do you think there's an advantage to keeping track of taxes year-round and filing quarterly? Do you prefer to do it all at once at the end of the year?
Assuming you are talking about income taxes, I am trying to figure out why you think it is optional.
Well, ok, technically it is optional I guess if you like paying penalties an interest in addition to the income tax you owe.
The only time you do not have to file quarterly estimated taxes is if you had a zero tax due last year.
The IRS is specific, if you will owe more than $1,000 in taxes, you use estimated quarterly taxes.
Individuals, including sole proprietors, partners, and S corporation shareholders, generally have to make estimated tax payments if they expect to owe tax of $1,000 or more when their return is filed.
If you didn’t pay enough tax throughout the year, either through withholding or by making estimated tax payments, you may have to pay a penalty for underpayment of estimated tax. Generally, most taxpayers will avoid this penalty if they owe less than $1,000 in tax after subtracting their withholdings and credits, or if they paid at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller.
https://www.irs.gov/businesses/small-businesses-self-employed/estimated-taxes
Hi @Rustler,
We absolutely recommend making the quarterly taxes when they're due to avoid any penalty. As we know, some self-employed opt to pay their taxes in one payment knowing they'll be penalized. I'm curious to know more behind the choice to make the annual payment that's accruing interest, versus making the quarterly payment to avoid penalty.
I don't think @KimberlyT is implying that people have an option to pay their taxes - everyone must and should pay their taxes. However, some people realistically do not pay quarterly and take the penalty, maybe because they can't keep up with managing their books throughout the year, or they are chronically some missing information.
Essentially, life happens. We aren't recommending people do this, I think Kim is asking those who do wait, how they manage this. A case for constantly improving quarterly tax tracking capabilities (a la QBSE).
@Anonymous wrote:
I don't think @KimberlyT is implying that people have an option to pay their taxes - everyone must and should pay their taxes. However, some people realistically do not pay quarterly and take the penalty, maybe because they can't keep up with managing their books throughout the year, or they have some missing information.
Essentially, life happens. We aren't recommending people do this, I think Kim is asking those who do wait, how they manage this. A case for constantly improving quarterly tax tracking capabilities (a la QBSE).
You could be right, just not the way the question reads to me.
Last I looked the est tax portion of QBSE was inaccurate, at least when I plugged my numbers into it. But I probably messed something up there
Hey @Rustler - Have you updated your tax profile? You'll see the tax profile when you click your gear icon. Typically this section gets skipped (unnoticed, really) and if it isn't filled out to reflect your situation you'll definitely have "wrong" numbers. If that's updated and you're still not seeing the right numbers, feel free to DM me your email address associated to your QBSE account and I'll be happy to review it :)
@KimberlyT wrote:Hey @Rustler - Have you updated your tax profile? You'll see the tax profile when you click your gear icon. Typically this section gets skipped (unnoticed, really) and if it isn't filled out to reflect your situation you'll definitely have "wrong" numbers. If that's updated and you're still not seeing the right numbers, feel free to DM me your email address associated to your QBSE account and I'll be happy to review it :)
Thanks for the offer, I was demoing QBSE and yes I did fill out the tax profile.
I wouldn't use QBSE at all so I do not have an account
I have a spreadsheet set up that does all the calculations for me based upon my businesses, retirement, etc etc and investing results and uses the current estimated tax tables, it works and that is what I compared the results to.
QBSE calculates the estimated taxes based on the total annual projections, self-employment income and deductions, and your tax bracket from your tax profile. As you may know, we don't calculate the following estimated taxes or tax situations-
Without comparing your excel sheet data to what we require in QBSE to fill out the 1040-ES, I wouldn't be able to identify the discrepancy. It sounds like you're factoring in other tax information that isn't considered on the 1040-ES. You mentioned your retirement and other info is included on your spreadsheet, but retirement isn't a part of the calculations unless you're receiving income from farming _and_ social security retirement.
It sounds like you're doing a more robust estimate that branches out more than what's factored on the 1040-ES. Calculating the estimated taxes properly is the highest priority, so if there really is an issue we will drop everything to review it and fix it.
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