How to Estimate Annual Gross Income – Heard

Overview

In order to provide a quarterly tax estimate, Heard will request your annual gross income. There are two ways to enter your annual gross income for your quarterly estimate tax calculation, depending on your scenario.

Year-to-date from paystub

Simply enter the year-to-date (YTD) from your latest paystub, and your projected annual gross income will populate on the quarterly checklist. Select this option if you or your spouse:

Have a job that doesn’t vary in pay throughout the year.
Don’t expect your gross income to significantly change throughout the year.

Estimated income

Enter the total annual gross income you estimate to earn this year. Select this option if you or your spouse:

Earn an income that is variable throughout the year (e.g., hourly income where the amount of hours is variable, frequent commissions or bonuses)
Had or expect changes to your gross income this year (e.g., new job, significant raise, parental leave)
Started a new job or ended a job partially through the year.

Accounting for Various Income Scenarios

Below are some common scenarios impacting therapists' annual gross income.

Variable income (including commission) - Example: Base salary of $50,000 with expected commissions of $30,000
Calculation: $50,000 + $30,000 = $80,000 estimated annual income. Enter $80,000 as your estimated annual income.
Earned or expecting a bonus - Example: Salary of $75,000 with an expected year-end bonus of $10,000
Calculation: $75,000 + $10,000 = $85,000 estimated annual income. Enter $85,000 as your estimated annual income.
Started a new job mid-year - Example: Previous job (January - May): Annual salary of $60,000, worked 5 months. New job (June - December): Annual salary of $72,000, will work 7 months
Calculation:
Old job: ($60,000 ÷ 12 months) × 5 months = $25,000
New job: ($72,000 ÷ 12 months) × 7 months = $42,000
Total: $25,000 + $42,000 = $67,000 estimated annual income. Enter $67,000 as your estimated annual income.
Ended a job mid-year - Example: Your job had an annual salary of $70,000, but you worked from January to June (6 months) and don’t expect further income this year.
Calculation: ($70,000 ÷ 12 months) × 6 months = $35,000 estimated annual income. Enter $35,000 as your estimated annual income.
Unpaid parental leave - Example: Annual salary: $72,000 (6,000/month) Unpaid leave: 3 months
Calculation: $72,000 − ($6,000 × 3 months) = $54,000 estimated annual income. Enter $54,000 as your estimated annual income.
Hourly worker with a mid-year raise - Example: January - June: $20/hour, 40 hours/week. July - December: $22/hour, 40 hours/week
Calculation:
First half: $20 × 40 hours × 26 weeks = $20,800
Second half: $22 × 40 hours × 26 weeks = $22,880
Total: $20,800 + $22,880 = $43,680 estimated annual income. Enter $43,680 as your estimated annual income.
Hourly worker expecting to reduce hours - Example: January - August: $25/hour, 40 hours/week. September - December: $25/hour, 20 hours/week (reducing hours to focus on private practice)
Calculation:
First 8 months: $25 × 40 hours × 35 weeks = $35,000
Last 4 months: $25 × 20 hours × 17 weeks = $8,500
Total: $35,000 + $8,500 = $43,500 estimated annual income. Enter $43,500 as your estimated annual income.

As a reminder, it can be difficult to accurately predict your income. The most important thing is to input the right income and withholding amounts throughout the year so that Heard can assist you in calculating estimated tax and planning for your end-of-year tax liability.

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