La Quinta, CA
(760) 895-3516

Tuesday, May 5, 2015

How Much Should an Estimated Income Tax Quarterly Installment Payment Be?

Estimated income tax installment payments are typically made by self employed individuals and those receiving income that is not subject to withholding tax such as a W-2 job. You can choose to have tax withheld from some sources of income, you would need to talk to the payer to have those setup.

The goal of paying estimated income tax quarterly installment payments is to withhold 90% or more of the estimated income tax liability so that you do not have a huge tax liability to pay on April 15th. 

 

How Much Should an Estimated Income Tax Quarterly Installment Payment Be?


A Quarterly estimated income tax installment payment made should be for:
  • 25% of the least of:
    • 100% of prior year's income tax liability
    • 90% of current year's tax
    • 90% of annualized current year's tax
Example: Let's say this year your tax liability is $30,000. Your tax liability for the last year was $23,000. This is how much estimated income tax you may choose to pay if you expect to make more money this year.

$23,000 x 0.25 = Quarterly payment of $5,750.

This is how much should be paid in quarterly estimated income tax payments.

Need help with income taxes? Call Borders Bookkeeping in La Quinta California. We provide tax preparation to La Quinta, Indio, Rancho Mirage, Palm Desert, and Palm Springs.

(760) 895-3516