Due to changes in the tax code made by the Tax Cuts and Jobs Act, self-employed individuals may see a major change in their tax liability for 2018. TaxSlayer encourages you to use the estimates calculator in the program for your self-employed clients to help them determine their correct tax liability and make the correct amount of estimated payments. Estimated tax is the method used to pay tax on income that isn’t subject to withholding (earnings from self-employment, interest, dividends, rents, alimony, etc.). If an individual does not elect voluntary withholding they should also make estimated tax payments on other taxable income. Examples of this income are unemployment compensation and the taxable part of social security benefits.
In figuring the correct amount of 2018 estimated tax, make sure to consider the following;
- Change in tax rates – 2018 tax rates are 10%, 12%, 22%, 24%, 32%, 35% and 37%.
- Deduction for personal exemptions suspended
- Changes in child tax credit and additional child tax credit
- Credit for other dependents
- Social security number (SSN) required for child tax credit
- Unearned income of children
- Changes to itemized deductions
- Code section 199A – Deduction for Qualified Business Income
- Alternative minimum tax (AMT) exemption amount increased
- Moving expenses no longer deductible
- Standard deduction amount increased
- Social security tax
- Adoption credit or exclusion
Payment Due Dates;
- 1st payment – April 17, 2018
- 2nd payment – June 15, 2018
- 3rd payment – Sept. 17, 2018
- 4th payment – Jan. 15, 2019
* * The payment due January 15, 2019 does not have to be made if the individual files their 2018 tax return by January 31, 2019 and pays the entire balance due with the return.
Adjustments have been made in the calculator for the 2018 column to reflect the new standard deduction amounts and zero dollar amount for exemptions. Please keep in mind that the Business Income Deduction has not been applied and you need to manually account for this when entering the 2018 Business Income information.
To enter 1040-ES information in TaxSlayer Pro, from the main menu of the tax return (Form 1040) select:
- Payments, Estimates and EIC
- Generate 2018 Estimates
- Estimates Calculator
For more information on 2018 Estimated Tax for Individuals visit: https://www.irs.gov/pub/irs-pdf/f1040es.pdf