Figuring out estimated payments may seem a bit confusing. But I have a simple approach – that is, assuming your tax obligation will be the same or higher compared to last year’s.
Here’s how to do it:
- Get a copy of last year’s 1040 return
- Go to line 76. This is the amount you paid to Uncle Sam. Let’s say you shelled out $20,000.
- Then you subtract any withholding. Suppose for the year, this has come to $5,000. So, the net amount is $15,000 ($20,000 in taxes paid minus $5,000 in withholding).
- Finally, divide this amount by 4 or $15,000 / 4, which is $3,750.
And that’s it!