Overview
Four times a year, we utilize your income to help determine how much you owe in estimated tax each quarter. The quarterly estimated tax is paid toward your tax bill in quarterly installments towards federal and state taxes.
Contents
- What are quarterly estimated taxes?
- What information does Heard use for the calculation?
- What does Heard not account for in the calculation?
- How to receive accurate estimates
- When are quarterly taxes due?
- How can I pay quarterly tax estimates?
- What if I can't pay quarterly tax estimates?
- Webinar recording: Quarterly Tax Estimates
What are quarterly estimated taxes?
The IRS and most state agencies require private practice owners to make quarterly payments toward their annual tax bill, which is referred to as quarterly estimated tax. Filing and paying quarterly estimated taxes is a personal tax liability; it's recommended you pay these from your personal bank account.
What information does Heard use for the calculation?
Your estimated tax includes a calculation for both income tax and self-employment tax (if you're a sole proprietor). The calculation includes an estimated Qualified Business Income Deduction and a 50% deductible portion of self-employment taxes.
- Your business profits through your private practice
- Your W-2 income and withholdings
- Your additional income, for example, consulting, speaking, supervision
- Your spouse's income and withholdings if your status is married filing jointly
What does Heard not account for in the calculation?
Our quarterly tax estimator currently assumes the standard deduction amount. We are not currently able to incorporate:
- Medicare and Social Security Tax withheld from W-2 paystub
- Pre-tax deductions like retirement contributions or state QBI
- Tax credits that you may qualify for when filing your annual return
- Franchise Tax for S Corporations, as they vary by state
We aren’t able to provide quarterly estimates that do include these values. However, we will take these into account when filing your annual tax return to help maximize your chances of a refund. We still recommend that you pay the estimated amount to help reduce the risk of an underpayment penalty if doing so won’t cause financial hardship.
How to receive accurate estimates
- Upload any missing bank statements for your bookkeeper
- Review any transactions as requested by your bookkeeper
- Update your previous quarterly tax payment information in Heard
- Update your Practice Profile Tax information each quarter
- If applicable, update your spouse's tax information
When are quarterly taxes due?
The year is divided into four payment periods for estimated tax purposes, each with a specific payment due date.
| Months accounted for in the calculation | Payment Due Date | |
| Quarter 1 | January and February | April 15th |
| Quarter 2 | January - April | June 15th |
| Quarter 3 | January - July | September 15th |
| Quarter 4 | January - November | January 15th |
If you don't pay enough tax by the due date of each of the payment periods, you may be charged a penalty even if you are due a refund when you file your income tax return.
If the payment due date falls on a weekend or holiday, the deadline moves to the next business day.
Reminder: These are still estimates, and it is common to owe some money at year's end or have a refund coming your way. However, please note that if you underpay quarterly tax estimates or skip payments, you could be subject to an underpayment penalty.
How can I pay quarterly tax estimates?
Once you have received your estimate, you must submit your quarterly payment to the IRS and state. If you need assistance, see: How can I pay federal quarterly tax estimates?
You will want to upload your payment confirmation receipt in Heard so that the information can be included in your future quarterly tax estimates and your tax return at year-end. See: How can I upload quarterly tax payment receipts to Heard?
What if I can't pay quarterly tax estimates?
If you don’t pay enough tax through withholding and estimated tax payments, you may have to pay a penalty. You also may have to pay a penalty if your estimated tax payments are late, even if you are due a refund when you file your annual tax return.
You are required to pay estimated taxes and should do so to reduce the risk of underpayment penalties. See What to do if you can't pay quarterly taxes? for some guidance we've published on what happens when you don't, including how those penalties are calculated.
In the video below, the Heard team will explain quarterly tax estimates and the steps to receive an estimate in your Heard account.