How to Calculate Federal Taxes on Every Receipt for Income Taxes
How to Calculate Federal Taxes on Every Receipt for Income Taxes. As a self-employed individual or business owner, it is your responsibility to report all business earnings and pay annual taxes to the Internal Revenue Service. Instead of trying to pick through a jumbled mess of receipts when your taxes become due, initiate and maintain systematic record keeping of your business expenses throughout the year. Being prepared will help reduce stress and ensure a greater level of accuracy than trying to calculate your taxes just before the deadline or when they're past due, which could result in the IRS imposing fines or other penalties.
- Record-keeping book or software
Multiply all your actual and anticipated self-employment gross income receipts by 15.3 percent, to discover what your annual estimated self-employment tax will be. Visit CalcXML and use the free self-employment tax calculator by typing your annual estimated self-employment or business income in the indicated box (see References). Write down your estimated annual self-employment tax amount and save accordingly.
Add the total amount of all of your business expense receipts for the year. Claim the total amount of the sales tax that you actually paid in the year in which you are filing for on your state and local income taxes using the appropriate tax form such as a Schedule 1040 and Schedule A or Schedule C for itemized business deductions. See Resources for downloaded IRS tax forms and instructions.
Use the sales tax deduction calculator at the IRS website to accurately discover the amount of sales tax you may claim on your income taxes by filling out the worksheet on the IRS website and typing the corresponding data into the sales tax deduction calculator provided on the website (see References).
Answer questions online at the IRS website and select the year of the return If you did not methodically save and record your business receipts. Use your zip code or the corresponding entries on your 1040 as indicated by the website's instructions with the sales tax deduction calculator. Write down the estimated state and local sales tax results for your records. Save and remit taxes to the IRS in a timely fashion.
- Start an account for your estimated taxes so that you will have enough money to pay them at the end of the year when they become due.
- Failure to remit self-employment taxes may result in fines, wage garnishment, property liens and bank account seizure.