The Safe Harbor Approach to Estimating Your Taxes
Use the safe harbor approach to avoid a penalty.
If you're not sure what approach to take to figure out your estimated taxes and you just want to be safe, do the following:
- If your prior year adjusted gross income was $150,000 or less ($75,000 or less if married filing separately) make sure...
- your total withholdings (if any) plus
- your quarterly tax installments equal 100% of your prior year tax liability.
- If your prior year adjusted gross income was more than $150,000 (or over $75,000 if married filing separately) then make sure...
- your estimated tax installments for the current year equal at least 110% of your prior year tax liability.
Note: Your prior year tax return must have covered a full 12 months.
For Freelancers and independent Contractors
- Organzie your financial data into one central accounting system on the cloud
- Software kept up to date.
- Your data kept secure
- Anytime, anywhere data access.
- Pay your quarterly estimated taxes online.
- Export Schedule C to TurboTax at year-end for faster filing.
- Save up to 50% off QuickBooks Self-Employed. Track every deduction! Start your free trial now!
Have an accounting or bookkeeping question? Email it to me.
- Return to the Business Taxes Table of Contents to find related links