Here’s how to figure your estimated tax payments. Don’t worry if you’re feeling overwhelmed by the paperwork required form self-employed people- it’s not really as complex as the IRS makes it out to be.
If you’re self-employed this is required four times a year. There’s a simple worksheet put out by the IRS that helps your figure the payments and it’s called the 1040-ES. To fill out the worksheet so you can make your 2012 estimated tax payments, gather this list of items:
- 2012 Estimated tax worksheet
- instructions for the worksheet
- 2012 Tax tables
- 2011 tax return
Take your adjusted gross income from your 2011 tax return. Use this to estimate how much you will make in 2012. Your expected AGI is the income you expect to earn, minus all the deductions and credits you expect to receive.
Subtract from that amount any adjustments. Take your tax form from 2011 and look on lines 23 to 35. These are the adjustments you took last year so use them as a guide for 2012.
Subtract the itemized deductions or the standard deduction.
Subtract $3,800 for each exemption you have. Often this is just one personal exemption.
Now you have your expected taxable income for 2012. Use that amount and look it up in the 2012 Tax Rate schedules. You will pay 90% of that tax amount or you can choose to pay 100% of your 2011 tax. Divide it by four and there are your 2012 estimated tax payments. How you know how to figure estimated tax payments.