Calculating your quarterly estimated tax payment can feel overwhelming, especially with the fear of a penalty looming over your head. There are a few ways to calculate how much you’ll owe. One place to start is by using a
tax bracket calculator to see which tax bracket you belong to.
Method 1
The first option is a good choice if you have consistent self-employment income, or you’re confident in how much income you’ll earn for the year. Estimate how much you think you’ll owe for the year and send one-fourth of it to the IRS. For example, if you estimate you’ll owe $25,000 for the year from your dog walking business, you would end up paying $6,250 each quarter
Method 2
The second method is meant for those with varying incomes who aren't sure how much money they will bring in each quarter. If you work as a landscaper, for example, your income might be higher in the warmer months in comparison to the colder months, making it hard to predict how much you’ll earn. You’ll estimate your yearly tax obligation based on your previous year's earnings. At the end of each quarter, you’ll analyze your current tax so far based on your income,
tax write-offs and
tax credits. A
quarterly tax calculator can help with this, and the IRS has a worksheet you can use, too.
Regardless of the method you use, there are a few options when it comes to making a payment to the IRS.