Top 5 Secrets to Navigating Estimated Taxes for Small Business Owners

Are you perplexed by estimated taxes and worried about potential penalties? Discover how to navigate the U.S. tax system's pay-as-you-go approach and strategically plan your payments to stay on top of your tax obligations!

In this episode, Mike Jesowshek discusses the importance of understanding and paying estimated taxes in the U.S., emphasizing the "pay as you go" system. He explains the concept of estimated taxes, key due dates for each quarter, and the significance of making timely payments to avoid penalties and interest. Mike introduces the "safe harbor" rule, which helps taxpayers avoid penalties if they pay a certain percentage of their previous year's tax or their current year's expected tax liability.

[00:00 - 01:21] Introduction to Estimated Taxes

• Mike Jesowshek introduces the topic of estimated taxes, explaining the pay-as-you-go system and upcoming deadlines.

[01:21 - 02:45] The Mechanics of Withholding

• Mike discusses how withholding works for W-2 employees and the responsibilities of business owners for making tax payments.

[02:45 - 04:32] Year-End Reconciliation and Tax Refunds

• What is year-end tax reconciliation and what are the misconceptions about tax refunds?

[04:32 - 06:28] Estimated Tax Due Dates and Payment

• Mike clarifies the quarterly tax payment due dates and the reasoning behind them.

[06:28 - 10:50] Safe Harbor Rule and Calculating Estimated Taxes

• Mike talks about the safe harbor rule, how to calculate estimated taxes and the differences based on adjusted gross income.

[10:50 - 17:06] Actual Method and Recap

• What is the actual method for calculating estimated taxes and the importance of planning for fluctuating business income?

Direct Quotes:

"A refund doesn't mean you saved money on taxes; it's just saying you paid too much in taxes throughout the year." - Mike Jesowshek, CPA

"Estimated taxes are the way that business owners can make payments against that future tax bill as they're earning money." - Mike Jesowshek, CPA

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Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings Podcast

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