Question 1

How much should I pay in quarterly estimated taxes?

Accepted Answer

Calculate your estimated annual LLC profit, compute self-employment tax (15.3%) and income tax at your marginal rate, subtract what your W-2 employer already withholds, then divide by 4. You can also meet the IRS safe harbor by paying 100% of last year's total tax.

Question 2

What happens if I miss a quarterly tax payment?

Accepted Answer

The IRS charges an underpayment penalty, currently calculated at the federal short-term rate plus 3 percentage points. You can avoid penalties by meeting the safe harbor rule: pay at least 100% of last year's tax liability (110% if AGI exceeded $150,000).

Quarterly Estimates