Does anyone else feel like they're just guessing when it comes to quarterly estimated taxes? I use an online calculator but still feel a sense of dread that I've gotten it completely wrong.

Business & Financial Management for Contractors
1

When it’s time to estimate quarterly taxes, I pull out my trusty online calculator, but honestly, I just feel lost.

No matter how many times I go through it, I can’t shake the fear that I’m making some rookie mistake and that it will bite me later.

2

It’s common to feel lost in estimating quarterly taxes. I started the same way but found it gets better with time. Keeping good records helps you track your income throughout the year.

I suggest using last year’s income as a guide. Adjust as needed for any changes. Being close to the actual amount usually keeps you clear of penalties.

3

Safe harbor rule saves you here. Pay 100% of last year’s tax (110% if you made over $150k) and you won’t get penalties, even if you underpay. I’ve done this for years - works every time. Just take last year’s total tax, divide by four, send that each quarter.

Once you’ve got it down, you can tweak based on how this year’s going. But safe harbor protects you while you figure it out.

4

I usually stick to what I paid last year too. It saves me the headache of guessing.