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When we calculated Small business / self- employed estimated taxes for tax year 2017 we only used the income earned by our small business, is this the correct process?

We are trying to determine for this taxable year[2018] estimated tax on our small business. We have reviewed 2017 estimated worksheet, it was solely based on the small business income made in last quarter of 2016. We need help and would like to speak to someone live on the phone, phone number is (removed). Thank you

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Anita01
New Member

When we calculated Small business / self- employed estimated taxes for tax year 2017 we only used the income earned by our small business, is this the correct process?

Since you would have to upgrade from the Free edition in order to receive phone support, I'll attempt to answer your question here.  You can always upgrade to a paid edition that allows phone support if we can't give you the information you need here.

Your estimated tax is not based on any one particular type of income; rather, it is based on the total amount of taxable income in your tax return.  When you estimate your taxes for quarterly payments, you should enter all your expected income.  The reason for this, is that any payments you make are not applied by the IRS to any specific tax owed but to your entire tax liability for the year, just as the total your owe for the year, when you file your return,  includes ALL tax, even your SELF-employment tax.

If you receive a W-2 and have tax withheld on that W-2, the tax withheld is applied on your return to any tax you owe, so it can end up reducing your self-employment tax owed, as well as the income tax you might owe on your self-employment income.  In the same vein, if you make an excessive estimate of your self-employment income, and have too little withheld to cover your W-2 wages, any and all tax you paid is used to offset the total tax you owe, including any that arises from being underwithheld on your W-2.


In short, your tax return deals with totals.  The total tax owed from any source is added up, then the total tax you paid with estimated payments plus any tax withheld on W-2s, etc., is subtracted to arrive at your refund for the year or tax owed or the year.  It doesn't matter if the tax owed stems from Self-employment tax (basically social security and medicare) on your business profit, or ordinary income tax on your profit.

It is true that some credits that reduce your income tax owed cannot be applied to reduce self-employment tax or certain penalty taxes, estimated tax paid in quartely, does reduce it.

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1 Reply
Anita01
New Member

When we calculated Small business / self- employed estimated taxes for tax year 2017 we only used the income earned by our small business, is this the correct process?

Since you would have to upgrade from the Free edition in order to receive phone support, I'll attempt to answer your question here.  You can always upgrade to a paid edition that allows phone support if we can't give you the information you need here.

Your estimated tax is not based on any one particular type of income; rather, it is based on the total amount of taxable income in your tax return.  When you estimate your taxes for quarterly payments, you should enter all your expected income.  The reason for this, is that any payments you make are not applied by the IRS to any specific tax owed but to your entire tax liability for the year, just as the total your owe for the year, when you file your return,  includes ALL tax, even your SELF-employment tax.

If you receive a W-2 and have tax withheld on that W-2, the tax withheld is applied on your return to any tax you owe, so it can end up reducing your self-employment tax owed, as well as the income tax you might owe on your self-employment income.  In the same vein, if you make an excessive estimate of your self-employment income, and have too little withheld to cover your W-2 wages, any and all tax you paid is used to offset the total tax you owe, including any that arises from being underwithheld on your W-2.


In short, your tax return deals with totals.  The total tax owed from any source is added up, then the total tax you paid with estimated payments plus any tax withheld on W-2s, etc., is subtracted to arrive at your refund for the year or tax owed or the year.  It doesn't matter if the tax owed stems from Self-employment tax (basically social security and medicare) on your business profit, or ordinary income tax on your profit.

It is true that some credits that reduce your income tax owed cannot be applied to reduce self-employment tax or certain penalty taxes, estimated tax paid in quartely, does reduce it.

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