Individuals, including sole proprietors, partners, and S corporation shareholders, generally have to make estimated tax payments if they expect to owe tax of $1,000 or more when their return is filed.
If you do not pay estimated taxes throughout the year, you will owe estimated tax penalties. The rate changes often, but it is usually anywhere from 6%-8% per year.
In the planning section, under the concepts tab you will find the Estimated Tax Payments Planner. The calculations of your estimated tax are based upon the projections created on the dashboard. Each quarterly amount is calculated using that quarter's income data and could be different each quarter depending on business performance.
Step 1.
Select the current year from the drop down in your dashboard.
Step 2.
Manually enter the previous years federal and state tax totals. This is how the planner will know both the federal and state Safe Harbor. Safe Harbor is based on what last years tax was, so 100% of last years tax or 110% if they are over a certain threshold. This can be found in the personal summary < taxes tab.
Step 3.
Now we would want to enter any quarterly estimated payments that the client has made. This can be done in the personal summary < Payments tab.
Step 4.
Now we can look at the planner. This can be found in the Planning section < concepts tab.
You will see that it used last years taxes to generate the safe harbor amounts these amounts are divided among the quarters giving us the "Required Federal/State Payments".
It will pull the payment made for Q1 and subtract it from the projected federal payment giving us the "Cumulative Shortfall". (If the shortfall amounts are displayed in green it will indicate an over payment.)
The "Projected Federal Payment" is calculated using that quarter's income data and can be different each quarter depending on business performance.
Please note that quarters that have not yet happened will not populate in the planner. Amounts and totals can be overridden in the report manually.
Manual Entry In The Report:
If you want to change this data manually before presenting to a client it can be customized in the report options < strategy details < estimated tax payments.
After making any necessary edits always be sure to click "save" at the bottom of the report options for your changes to take effect.
It is important to note that any values used to override the varying fields in the planner would require manual calculation of the totals and shortfalls to be entered as well.