Estimated Tax Payments

Calculate Your Estimated Tax Payments

Here's what you need to do each quarter:

1. Calculate Your Estimated Tax Payments
   Calculate your Federal and State estimated tax payments as follows:
   
   
   1. Federal Tax
      The Federal tax that you must pay consists of two components: an Income Tax and a Self-Employment Tax.
      
      
      1. Federal Income Tax
         Please note that, for Federal income tax purposes, long-term capital gains (LTCGs) income is taxed at preferential rates, whereas short-term capital gains (STCGs) income is taxed at ordinary rates.
         
      1. Add your net self-employment income, short-term capital gains (STCGs) income and any alimony received together. This subtotal is your Taxable Self-Employment Income (TSEI).
         
         The amount of Federal Income Tax that you should pay will depend upon your TSEI, as follows:
         
         

         TSEI (Married, filing jointly)	TSEI	Estimated Tax Rate
         Over $500,00	Over $250,000	30%
         $350,000 - $500,000	$175,000 - $250,000	25%
         $200,000 - $350,000	$100,000 - $175,000	20%
         $100,000 - $200,000	$50,000 - $100,000	15%
         < $100,000	< $50,000	10%

         
         
         Multiply your TSEI by the applicable percentage from the above table.
      2. The amount of Federal Income Tax that you should pay on your long-term capital gains (LTCGs) income will depend upon your Total Taxable Income (TTI) as follows:
         
         

         Year	TTI (Married, filing jointly)	TTI Single filers	LTCG Tax Rate
         2022	Over $517,200	Over $459,750	20%
         	$83,350 - $517,200	$41,675 - $459,750	15%
         	< $83,350	< $41,675	0%
         2021	Over $501,600	Over $445,850	20%
         	$80,800 - $501,600	$40,400 - $445,850	15%
         	< $80,800	< $40,400	0%

         
         
         Yes, you read this correctly. Taxpayers won’t pay any capital gains tax on their LTCG income if their total taxable income is below the minimum threshold indicated in the above table.
         
         Multiply your long-term capital gains (LTCGs) income by the applicable percentage from the above table.
         
         Add these two subtotals together. This is the amount of Federal estimated income tax that you will pay.
         
         
      2. Federal Self-Employment Tax
         The Federal Self-Employment Tax applies only to income received from self-employment, as an independent consultant, or as a subcontractor (if you received income from alimony, investment income or rental property, you may skip this step.)
         
         The Federal Self-Employment Tax is simply the sum of the standard Social Security and Medicare taxes, but levied twice - once on yourself as the employee, and a second time as the employer. This is exactly the same way that these payroll taxes are levied on the W-2 income of employees, and on the payroll of their employers. The Self-Employment Tax can be summarized as follows:
         
         

         Payroll Tax	Employee Portion	Employer Portion	Total
         Social Security	6.20%	6.20%	12.4%
         Medicare	1.45%	1.45%	2.9%
         ------	------	------	------
         Total	7.65%	7.65%	15.3%

         
         
         The Self-Employment tax is in addition to the Federal estimated income tax that is calculated in Paragraph 1 above.
         
         Normally, you should multiply your Net Income from Self-Employment by 15.3%. This is the amount of Federal Self-Employment tax that you will pay. However, the maximum earnings that are subject to the Social Security payroll tax is capped each year as follows:
         
         

         Tax Year	Maximum Taxable Earnings
         2022	$147,000
         2021	$142,800
         2020	$137,700

         
         
         Any earnings from self-employment received above these annual amounts are not subject to the Social Security tax. Once your Net Income from Self-Employment has exceeded this threshold, which usually occurs later in the year, you should multiply your Net Income from Self-Employment by just 2.9%.
         
         Reduction in Total Income. When you file your Form 1040 income tax return, you will receive a reduction (NOT a credit) of 50% of the total Federal Self-Employment Tax that you paid during the year. This adjustment to your income is reported on Schedule 1, Part II of your Form 1040 return.
         
         In the overall scheme of Federal taxation, this reduction will have a minimal impact upon the final result of your return when compared with the amount of Federal Self-Employment Tax that you’ve paid.
         
         Social Security Benefits. When you reach retirement age, you may become eligible to receive Social Security benefits at that time. The Social Security benefits that you do receive will effectively be repayment of the Social Security portion (i.e., the 12.4%) of the Federal Self-Employment Taxes that you had paid while you were self-employed.
         
         However, if you had worked as a Federal, state or municipal employee during your career, and contributed into a separate plan, you would not be eligible to receive Social Security benefits. In this case, the Federal Self-Employment Taxes you paid are, unfortunately, exactly that – additional taxes.
         
         
      3. Add The Two Federal Taxes
         Add your Federal Income Tax and your Federal Self-Employment Tax together. This is the amount of Federal estimated income tax that you will pay.
         
         
   2. State Income Tax
      
      
      1. Massachusetts residents only
         Please note that, for Massachusetts income tax purposes, long-term capital gains (LTCGs) income is taxed at the ordinary rate, whereas short-term capital gains (STCGs) income is taxed at much higher rate of 12.0%.
         
         1. Add all of your interest, dividends, net self-employment income, long-term capital gains (LTCGs) income and any alimony received together. Do not include your nNet Massachusetts short-term capital gains (STCGs) income in this subtotal. Multiply this subtotal by 5.0%.
            
            
         2. Multiply your Net Massachusetts Short-Term Capital Gains Income by 12.0%.
            
            
         3. Add these two subtotals together. This is the amount of Massachusetts estimated income tax that you will pay.
            
            
      2. New Hampshire residents only
         Multiply your Net N.H. Investment Income by 5.0%. This is the amount of N.H. estimated income tax that you will pay.
         
         
2. Payment Due Dates
   

   Estimated Tax Payments are not due at the same time each Quarter. Here is the schedule of the payment due dates: 

   Quarter	Dates Included	Due Date
   1	Jan. 1 to March 31	April 15
   2	April 1 to June 30	June 15
   3	July 1 to Sept. 30	Sept. 15
   4	Oct. 1 to Dec. 31	Jan. 15 (of the following year)