Per Diem Rates from the U.S. General Services Administration

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Rates are set by fiscal year, effective October 1 each year. Find current rates in the continental United States ("CONUS Rates").

Per Diem Rates

How to Calculate Estimated Taxes

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There are three approaches to estimating your tax for they year:

1. Use your prior year's tax return.
2. Estimate your taxes from scratch.
3. Use the safe harbor approach.

Use Your Prior Year's Tax Return

• If you expect your current year income and deductions to be about the same as your previous year, base your current year estimated taxes on your prior year return.
• Your prior year return must cover a full 12 months.
• Apply the current year tax rates to your prior year taxable income.
• Make sure you pay at least 90% of your expected annual tax liability to avoid an underpayment penalty.
  • Example: If your annul estimated federal income tax liability plus your self-employment tax liability total $8,000, multiply $8,000 by 90%, which equals $7,200.
  • The $7,200 is your required annual tax payment. At least this amount must be paid in order to avoid an underpayment penalty.
  • Now, to figure your minimum quarterly estimated tax installment:
    • Divide the $7,200 by 4, which equals a minimum quarterly installment of $1,800.
    • You can remit the $1,800 using Form 1040-ES, Individual Estimated Tax Voucher.
• Each quarterly minimum installment stands on its own.
  • This means, you must pay at least 25% of your annual liability each quarter.
  • If you pay less than 25% each quarter, you will be subject to an underpayment penalty for the quarter that is short.
    • Making up the short payment for one quarter in a future quarter does not eliminate the underpayment penalty for the quarter that was short.

Estimating Your Taxes From Scratch

Estimating taxes for cash basis taxpayers on a calendar year:

When estimating your taxes, if you are a cash basis taxpayer, remember to apply the rules under the cash method of accounting for reporting income and expenses:

• Report income only when actually or constructively received.
• Report expenses only when actually paid.

Constructive receipt of income occurs when you have an unrestricted right to income you have not physically taken possession of. For example, interest credited to your bank account in December of the prior year but not withdrawn by you until January of the following year is reported in the prior year, when it was constructively received.

Calendar Year:

A calendar year ends on December 31. (A fiscal year ends on the last day of any month except December.)

Calendar year taxpayers include the 12-month period beginning January 1 and ending December 31 for tax-reporting.

Consider the following items when estimating your annual tax liability:

• Your filing status:
  • Single, married filing jointly, married filing separately, head of household, qualifying widow(er)
• Exemptions:
  • Do you have any dependents, such children or a parent that you are supporting?
  • Are you supporting an unrelated person who lives with you?
• Gross income:
  • Consider all potential sources of income you expect to receive during the year.
• Items you can deduct from gross income
  • Check the front of Form 1040 (through line 35) for items you may deduct from gross income.
  • Don't forget any carryover items from a prior year.
    • For example, if you had a capital loss that exceeded $3,000 in the prior year, the excess over $3,000 may be carried over to the following year.
• Adjusted gross income (AGI):
  • This is the result of deducting allowable items from gross income (items listed on the front of Form 1040 through line 35).
• Deductions from AGI:
  • Deduct the standard deduction OR itemized deductions, whichever is greater.
  • Deduct your allowable personal exemption(s)
• Taxable income:
  • Once you know your taxable income, you can figure your income tax using the tax tables (if your taxable income is $100,000 or less).
  • If taxable income is over $100,000, use the tax rate schedules.
• Tax credits:
  • Tax credits are subtracted from your federal income tax liability.
  • Tax credits are not deducted from self-employment tax.
• Tax payments you may have already made:
  • If you already made tax payments that apply to the year of your tax estimate, don't forget to consider them.
• Self-employment taxes:
  • Your annual federal estimated tax liability includes:
    • Federal income tax PLUS
    • Self-employment tax
• Alternative minimum tax:
  • If the alternative minimum tax (AMT) applies to you, you must include it with your estimated tax payment.
• Quarterly estimated tax payments:
  • Add your annual estimated federal income tax liability to your annual estimated self-employment tax liability and divide the total by 4.
  • Remit each quarterly payment by the due dates to avoid penalties.

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.