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How to Calculate 1040-ES taxes


 

When you are self-employed, you must pay quarterly estimated taxes to the Internal Revenue Service. "Estimated taxes" is another phrase for "provisional taxes." You will see both terms in discusions of business taxes. You must file Form 1040 ES every April 15, June 15, Sept. 15 and Jan. 15. You can incur fines if you do not pay enough estimated tax, so you should learn how to calculate your estimated taxes accurately.

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1040 Estimated Tax :

(Updated 6/12/2017)

How to Calculate
Employee
Payroll Checks »

    Step 1.

  • Pay 90 percent of this year's income tax. If you can estimate your taxes within 10 percent of what you will owe, you can avoid fines. You do this by estimating your gross income, then subtracting expenses and taking any deductions you have coming to you. Multiply the remaining figure by your tax bracket percentage. The percentages are listed after the worksheet on form 1040 ES. Your net income after expenses and tax credits times your tax percentage is your annual income tax. Divide this by four to make your quarterly payments.
  • Step 2.

  • Pay 100 percent of your tax liability from last year. This helps you avoid fines if your income jumps to a higher level than last year's. If you pay 100 percent of the previous year's taxes, the IRS will not fine you for coming up short if your income grows.
  • Step 3.

  • Pay 110 percent of last year's income tax if your income was greater than $150,000. Your other choice is to pay 90 percent of the current year's income tax to avoid penalties. If you pay 110 percent of last year's taxes and find your income dropped, you will be due a refund. Remember to divide the annual figure by four to make quarterly payments.

    Step 4.

    Fill out the IRS worksheet at the end of Form 1040 ES. This worksheet asks you for important figures from income to deductions. It even helps you figure Social Security tax. The form is complex, but it can help you get within the 90 percent range for this year's income taxes.

    Frequently Asked Questions

    1. What are the filing dates for federal quarterly estimated tax payments?

    Payment Period Due Date
    January 1 - March 31, 2017 April 18, 2017
    April 1 - May 31, 2017 June 15, 2017
    June 1 - August 31, 2017 September 15, 2017
    September 1 - December 31, 2017 January 16, 2018

    *You do not have to make the payment due on January 16, 2018, if you file your 2017 tax return by January 31, 2018 and pay the entire balance due with your return.

    2. How do I make federal quarterly estimated payments?

    The IRS provides various methods for making 2017 quarterly estimated tax payments:

    3. What if I do not pay enough federal income tax in a timely manner for the calendar year 2017?

    Generally, if you do not pay enough tax in a timely manner either through withholding or making estimated tax payments, you may be required to pay a penalty.

    Please refer toIRS Publication 505, Tax Withholding and Estimated Tax, for a detailed discussion of the underpayment penalty, including exceptions to this penalty.

    4. How do I obtain additional information regarding federal quarterly estimated tax payments?

    Please refer to IRS Form 1040-ES Instructions and IRS Publication 505, Tax Withholding and Estimated Tax, for additional information regarding federal quarterly estimated tax payments or consult your personal tax advisor.

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Please note: Our explanation that are provided on our web site for "How to Calculate Futa and Suta taxes" are only meant to provide general guidance and estimates about the payroll process. They should not be relied upon to calculate exact taxes, payroll or other financial data. You should consult with a professional advisor or accountant regarding your specific payroll concerns.


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