Author Topic: Online calculaor for estimated taxes  (Read 422 times)

WorkingToUnwind

  • Bristles
  • ***
  • Posts: 342
Online calculaor for estimated taxes
« on: April 01, 2024, 11:36:54 AM »
Our accountant told us to set us 24% of my income aside for quarterly taxes in 2023. We ended up overpaying by 14k. I'd rather not overpay by that much, so I told him I'd like to examine that 24% recommendation a little more closely and see what we can safely drop it down to, without underpaying. He came back to me with a bunch of math and said 25%. ???

Does anyone have a good calculator they use for estimating taxes over the course of the year? I have pretty minimal business expenses, an i401k that I fund aggressively, and two kids for deductions.

morethanconquerors

  • 5 O'Clock Shadow
  • *
  • Posts: 32
Re: Online calculaor for estimated taxes
« Reply #1 on: April 01, 2024, 01:08:11 PM »
I do not know of one, but here is how I would calculate for a client. Could be helpful to compare to how your tax preparer calculated.

Illustrating with $200k of net business income.

Start with the self-employment tax calc. 15.3% of 92.35% of your net business income is the normal calculation, but with this amount of income, SS is capped at $168.6k, so it's slightly less. ($26.3k)

Then calculate your normal income tax

Net business income ($200k)
Less 50% of self-employment tax ($13.1k)
Less Standard Deduction ($29.2k)
Income before QBI = $137.7

Less QBI Deduction ($137.7 * .2 = $27.5)

Taxable Income = $110k

Income tax = $17.9k
SE Tax (from step 1) = $26.3k
Total Tax = $44.1k
Effective Tax = 28%
« Last Edit: April 02, 2024, 02:07:26 PM by morethanconquerors »

Jesstache

  • Stubble
  • **
  • Posts: 241
  • Location: Central OR
Re: Online calculaor for estimated taxes
« Reply #2 on: April 01, 2024, 02:10:52 PM »
I'd estimate what you need to pay quarterly, and this is what I do, by downloading the latest case study spreadsheet, which is phenomenal, and filling it in as much as you can in columns B, C, G, H, etc.  Cell D67 will spit out the total tax liability you should expect, which adds cell D63 for Fed and cell D64 for State.  From there I take the Fed and State (Oregon for me) taxes and calculate the percentage of each we will owe based on gross self-employed income.

So for this tax year, I estimated 175k in gross self-employment income (one earner and engineering work so not really a lot of business write-offs, i.e. gross is close to net but ymmv) and 24k in net rental income, married with 2 kids, our estimated Fed Tax for the year = $38542 and State Tax for the 2024 tax year = $14361.  With that, I estimate how much of the self employment checks I need to set aside so Fed = 38542/175000 = 22.02% and OR = 14361/175000 = 8.21%.  Then I add together Fed + State combined (30.23%) and round it up to 35% to save total out of each self employment check and call it a day (I over estimate because if we earn more than expected later in the year, it will be at a higher marginal tax rate, somewhere around 24% federal and OR's top rate is 8.75%, which combined is just under 35%, I could probably bump it down to 33% but 2% isn't going to make or break us).

When it comes time to actually pay the estimated taxes, I update with the real earnings numbers for the quarter and basically end up sending in 24% of actual gross self employment income for Fed and 9% for OR to have a little buffer and end up with a small refund at tax time.  If I end up with a few extra k in the tax savings account, I take it out, which, as you can see I usually do by design - but at least it's sitting in my own account earning interest and not with the IRS.  Then I contribute the excess savings to our kids' 529 plans.


Sandi_k

  • Handlebar Stache
  • *****
  • Posts: 1598
  • Location: California
Re: Online calculaor for estimated taxes
« Reply #3 on: April 01, 2024, 02:23:33 PM »
My sister really likes paycheckcity.com

I have a spreadsheet, that uses a similar methodology to what @morethanconquerors lays out.

MDM

  • Senior Mustachian
  • ********
  • Posts: 11490
Re: Online calculaor for estimated taxes
« Reply #4 on: April 02, 2024, 03:01:57 PM »
Does anyone have a good calculator they use for estimating taxes over the course of the year?
As Jesstache said, the case study spreadsheet can be useful for this.

Omy

  • Handlebar Stache
  • *****
  • Posts: 1743
Re: Online calculaor for estimated taxes
« Reply #5 on: April 03, 2024, 08:35:19 AM »
We just thrown our estimated income into turbotax and let it do the math.

sisto

  • Handlebar Stache
  • *****
  • Posts: 1085
  • Age: 55
  • Location: Sacramento, CA
Re: Online calculaor for estimated taxes
« Reply #6 on: April 03, 2024, 09:22:42 AM »
I use to use Taxcaster until Intuit screwed it up. Now I use Jeremy's from Go Curry Cracker. Very simple format and the results work well for my purposes.
https://www.gocurrycracker.com/federal-income-tax-calculator/