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ShadowD

IRS Estimated Tax...Line 1 Adjusted Gross Income...Does it include expenses?

On Form 1040 ES, the quarterly estimated tax form for the IRS, I have a question about Line 1...the "adjusted gross income" I expect for 2008. How do I estimate it? Do I just take the number I made to date and multiply by 4? I made tons of money in January, but I can't estimate on that explosion of money because it's just not coming at that rate anymore... Where do I include my expenses? What should I specifically do so I only have to pay 110% of last year's income quarterly instead of 90% of this year's income quarterly? And if I'm self-employed...do I include ALL my self-employment income on line 1? And then I list that same income again when I do the estimated self-employment tax?

6 months ago - 1 answers

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Chosen by Asker

You estimate it as if you were doing your taxes: 1. What do you expect your total income (from all sources) will be? 2. What do you expect your total adjustments to income will be? That's your expected AGI for 2008. Another way to do it is to start with your 2007 taxes. Use that as your estimated 2008 income (and tax liability). Since you can re-estimate this quarter-by-quarter, you'll know what your next estimated quarterly payment should be based on the income you earned in that recent quarter. (Since taxes are a pay-as-you-go system, as long as your quarterly payments match are in synch with your income, you'll be OK with the IRS.)

by Brian J

6 months ago

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