Computing estimated taxes

ssouss — Wed, 11 Feb 2026 10:14:35 GMT

Is there a simple way to determine how much I should pay quarterly in estimated taxes ?

Re: Computing estimated taxes

Bsch4477 — Wed, 28 Aug 2024 23:39:00 GMT

An estimate is to pay 30% of your net self employment income.

Re: Computing estimated taxes

kwallace4 — Tue, 03 Sep 2024 23:32:38 GMT

Bsch4477 is approximately correct, a good rule of thumb is about a third. But it might help to detail this out just a bit so you can adjust the number for your particular situation, if needed. This approximation comes from the following rates:

1) SECA tax of 6.2% Social Security employee portion and 6.2% employer portion - total 12.4% plus

2) SECA tax of 1.45% Medicare employee portion and 1.45% employer portion - total 2.9%

3) Federal tax marginal rate on the low end of 12%.

So the total here is 15.3% SECA tax plus 12% income tax - total 27.3%. Notice that it doesn't take into account higher marginal tax rates such as 22%, 24%, 32%, 35% and 37%. It's up to you to adjust your estimate for your own marginal tax rate (tax braket) and you can use this tool to help with that estimate (look for taxcaster).

It also doesn't take into account state income tax if you have one. Some states will penalize you for not pre-paying quarterly just like the Federal Govt and some do not. Either way, these are two separate payments which can be done electronically. This is for the IRS: https://www.irs.gov/payments.

This estimate also does not account for any other payments you may have such as withholding from a W2 job or from other types of income and credits for which you may be eligible (EITC, CTC, AOTC etc).

Also, it's up to you to calculate your NET self-employment income as you will likely have expenses against the gross income. Not always, but usually, so the the net effect is less tax. So take the tax rates discussed above and multiple against your net income. You can look at your prior year return and get some idea if there are any credits again this year if the same situation and income levels apply.

Finally, keep in mind the following guardrails as to who must make estimated tax payments in general per the IRS:

"Individuals, including sole proprietors, partners and S corporation shareholders, may need to make estimated tax payments if:

they expect to owe at least $1,000 when they file their tax return.
they owed tax in the prior year."

Having said that, it's always a good idea to prepay tax on expected income so you have withholding on all of your earnings and are left in a sold refund position rather than owing. It's not a happy surprise to have penalties and interest on a tax due balance if you estimate wrong.

topic Computing estimated taxes in Business & farm

Computing estimated taxes

Re: Computing estimated taxes

Re: Computing estimated taxes