Please carefully review these assumptions and expectations about using this tool.

  1. This tool does not constitute tax advice. It assumes you are also working with a tax advisor or accountant to assess the accuracy of the results. 
  2. The quarterly tax estimation is based the standard deduction per your chosen filing status. If you prefer to use an itemized deduction amount read more here.
  3. The quarterly tax estimate is created by prorating your deduction through the year. For example, in Q1, the tax calculation is built using ¼ of the deduction. In Q3, the calculation uses ¾ of the deduction. Consult your tax advisor to see if this approach is right for you.
  4. The state tax estimation is based on a flat tax rate percentage. Many states use a flat rate whereas others utilize a  bracket system. You are required to calculate your effective state tax rate if your state uses a bracket system and input it into the manual state tax rate field. 
  5. Methodology: The tool assumes you’re using cash basis accounting, not accrual basis accounting methodology. 
  6. Estimated taxes in subsequent quarters are cumulative. They are calculated assuming you paid the estimated amount the tool suggested for previous quarters. (e.g. if the estimated tax for Q1— calculated on an annualized basis— is $100 and the estimated tax for Q2 is $250 the estimated tax calculation for Q2 will be $150, based on the assumption that you paid $100 in Q1). There is no override for this mechanism. 
  7. The tool does not factor in reconciliation of any subsidies you may have received from the Healthcare Marketplace (through the Affordable Care Act, aka Obamacare) for health insurance (e.g. this means you could owe more or less depending on whether you were eligible for and/or took a subsidy offered for your health insurance). 
  8. The tool does not factor in, or have a place to account for, tax credits you may receive that could lower your overall individual or joint tax liability (e.g. child care tax credits). 
  9. This tool makes no comparison of your taxable income to any Alternative Minimum Tax calculation. Consult your tax advisor or accountant if you think you may be subject AMT. The tool will however, still give you a great snapshot of your tax liability in relation to all tax brackets, regardless of income.
  10. This tool does not account for other quarterly tax obligations outside of business earnings such as investment earnings, rental income, spousal income from a W2, etc. 
  11. If you’re using the Business Mileage Adjustment section to account for vehicle use on a mileage basis be sure that you do not double count vehicle expenses as an additional business expense in the category sheet (i.e. don’t tag vehicle related expense categories as “Business.”
  12. If filing as Married - Filing Jointly, estimations will be most accurate if your spouse does not work/receive a W2 or have any other outside income The tool also does not account for child tax credits, dependent care credits, or dependent income if you have dependents.
  13. If filing as Head of Household, remember the tool does not account for child tax credits. 
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