How To Track Your Income & Expenses & Calculate Your Quarterly Estimated Taxes Yourself using Excel | Desarie Anderson | Skillshare

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How To Track Your Income & Expenses & Calculate Your Quarterly Estimated Taxes Yourself using Excel

teacher avatar Desarie Anderson, Cash Flow Management

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Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

Watch this class and thousands more

Get unlimited access to every class
Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

Lessons in This Class

15 Lessons (1h 42m)
    • 1. 1 Introduction

      1:33
    • 2. The Agenda

      0:55
    • 3. 3 Who is required to pay estimated taxes

      5:38
    • 4. 4 How to calculate your estimated taxes

      7:15
    • 5. 5 Quarterly Estimated Tax Due Dates

      2:07
    • 6. 6 How To Set Aside Monthly Estimated Payments

      2:17
    • 7. 7 Different Ways To Pay Your Quarterly Estimated Taxes

      3:13
    • 8. 8 Estimated Tax Payment Penalties

      4:43
    • 9. 9 Introduction To The Hands On Demonstration

      4:42
    • 10. 10 The Instructions Tab

      2:15
    • 11. 11 The Chart of Accounts Tab

      4:17
    • 12. 12 The Transaction Tab

      4:41
    • 13. 13 Entering Transactions To Calculate Your Estimated Taxes

      20:56
    • 14. 14 Calculating Your Quarterly Estimated Taxes

      36:13
    • 15. 15 Final Message Regarding Future Updates

      1:37
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About This Class

What you will learn in this class:

1) Who is required to pay estimated taxes and why?

2) Calculating your quarterly estimated taxes

3) When are your quarterly estimated taxed due?

4) All the different ways to pay your estimated taxes

5) What are the penalties for not filing your estimated taxes?

6) A hands-on demonstration on how to use Excel to calculate your estimated taxes.

The spreadsheet functions as a simple bookkeeping system and a quarterly tax estimated calculator.  You will be able to not only record and keep track of your income and expenses, but you will also be able to calculate your federal quarterly estimated taxes.

If you already use an outside bookkeeping system, like Quickbooks Online, but the system you use is not able to calculate your quarterly estimated taxes, you can use the spreadsheet as a calculator ONLY.  You do not have to use the spreadsheet to track your income and your expenses in order to use it to calculate your quarterly estimated tax payments. 

The spreadsheet is set up to track your income and expenses from 2017 through 2024.  Each year has its own sheet. 

You can also use the spreadsheet to project future growth rates using built-in growth rate percentages

The spreadsheet is limited to the following people:

1) Your tax filing status at the end of the year is single, and you make $157,500 or less a year

2) Your tax filing status at the end of the year is Married Filing Separately, and you make $157,500 or less a year 

3) Your tax filing status at the end of the year is Married Filing Jointly and together you both make $315,000 or less a year 

4) Neither You nor your spouse if you are Married Filing Jointly, receive W2 income from an employer 

5) Your income can only be derived from self-employment or investment income

Meet Your Teacher

Teacher Profile Image

Desarie Anderson

Cash Flow Management

Teacher

I am originally from London, England but currently live in Atlanta, GA with my husband David.

I always joke that I have had the distinct pleasure of using both the left and right side of my brain. I owned and operated a hair salon for over 17 years (Right side), and now I own a small Tax and Accounting practice (Left side). So you can get your hair cut & colored and get your taxes done all in one visit.

I graduated from Georgia State University with a BA in Accounting. I am a Georgia CPA and an IRS Enrolled Agent. I am also a certified QuickBooks online Pro advisor.

In addition to providing small businesses with bookkeeping and accounting services, I am passionate about helping small businesses manage their cash flow. No business can survive without proper c... See full profile

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Transcripts

1. 1 Introduction: hi, everyone, and welcome to calculating and paying your estimated taxes in this class. I'm going to be covering details about calculating your estimated taxes. This class comes with a pre formatted Excel worksheet calculator that is designed to help you calculate your estimated taxes by simply plugging in dollar amounts in their designated cells. But before I begin, I'd like to clearly explain who the Excel calculator is. Four. While the class itself is for anyone in everyone who is required to pay estimated taxes, the Excel worksheet is on Lee, designed for business owners and independent contractors who work for themselves. In other words, it's not designed for people who receive a W two from an employee. So if you need to take your W to pay into consideration when you're calculating your estimated taxes, this worksheet is not for you. If your filing status is married filing jointly, you can use this Excel calculator as long as neither of you your spouse has W two income. So once again, anybody who's required to pay estimated taxes can watch this class and definitely learn something from it. But if you have W two income, the actual Excel worksheet that comes with this class is not for you. You cannot use it to calculate your estimated taxes 2. The Agenda: Now let's talk about the agenda for this class. So in this class is going to be talking about who was required to pay estimated taxes, actually calculating your estimated taxes and what other types of inputs that need to go into the calculation. Quarterly estimated tax due dates. So when is when are your payments? Do how to set aside monthly payments? It's important that you set aside monthly payments. That way, you don't wind up not having enough money to pay your taxes when the time comes. Different ways to pay your estimated taxes because there's more than one way to make the payment will be talking about estimated tax penalties. These other penalties that are imposed when you don't pay your estimated taxes on time. And then finally, we're going to be demonstrating, using the Excel worksheets to actually calculate estimated taxes. And remember, this worksheet is available to you 3. 3 Who is required to pay estimated taxes: Now let's talk about who is required to pay estimated taxes. So if you want a sole proprietor, meaning that you work as an independent contractor or you work in the gig economy and the gig economy is anything like uber lift. Or if you work for one of those food delivery companies, that any type of business that is based that's considered the gig economy because sometimes people think that when they work for at based companies, that they don't really have to pay taxes or that they don't really think about it. So as long as you are working and you are making any kind of money, whether you are set up as an actual official business or if you just woke up one day and said you wanted to start doing some type of work and you are getting money for that work, you are required to pay estimated taxes per iris laws. So if you're making any kind of money no matter what you're doing, you are required to pay estimated taxes if you are an L C. So whether you are a single member LLC or whether you are a multi member LLC, so a single member LLC is pretty much a sole proprietor who has decided to register their business with the state. And a multi member LLC is a partnership who was also decided to register their excuse me, register that business with the state. So if you are either one of these, you are requires to pay estimated taxes. Also, if you are a C corporation, you are also required to pay estimated taxes. So, as I said earlier, anyone in business that files a tax return is required to pay estimated taxes on there are some exceptions on. We'll talk about that in a moment. So if your self employment and your income tax combined equals $1000 or more, you are required to pay self employment tax. And for corporations, that amount is $500. And the reason why I say self employment and income tax is because self employment tax and income tax are two totally different items. So self employment taxes, one tax and then income tax is another tax, and when you add them together, that is what your total tax liability is for that particular year. So who is not required to pay estimated taxes. Anyone that works for an employer is not required to pay estimated taxes, and this is because your employer with holes taxes from your paycheck. So if you notice when you look at your paycheck, you can see that there has been a deduction made for Medic A and for Social Security and usually income tax. So under those circumstances, you are not required to pay estimated taxes. Now, if you have a side business that say you work as an employee as an employee at a company, but you also have a side business, meaning that you may work for you, Bo. You may work for lift, then. Under those circumstances, use are then required to pay estimated taxes because the money that you're making from your side gig, there are no taxes, the being withheld. So you're required under those circumstances to make estimated tax payments. Now, if you are an employee off your own s corporation with zero in distributions for that year , so what does this mean? So ask an s corporation. If you are an owner of an s corporation. By law, you are required to pay yourself a salary as an employee, so which means that you pay yourself payroll, which means at the end of the year you receive a W two from your S corporation. Now, as an S corporation, you can also receive distributions from your business. So if you have zero distributions in a particular year, then you're not really required to pay estimated taxes. On the other hand, if you anticipate that in addition to what you get paid on a weekly or biweekly basis as an employee of your business, if you also anticipate that you are going to just draw money out of US corporation, then you are required to pay estimated taxes based on that. If you owed less than $1000 in taxes in the previous year, you are not required to pay estimated taxes. So let's say, last year you did your taxes and you owed less than $1000. That means that in the next year you are not required to pay estimated taxes. Now I always say, if you know, but you're going to make enough money, I say, even though you're not required to pay estimated taxes because in the prior year you made less than 1000 to me is good practice to go ahead and pay the estimated taxes anyway, especially if you think you're going to go because you don't want to find yourself at the end of the year or at tax time, not having enough money to make the payment. And another reason why you may not be required to pay estimated taxes because you did not owe any tax in the previous year, as I mentioned and you did not have to file a tax return. So under certain circumstances, if you make below a certain amount of money, you're not required to file a tax return, and therefore you would not be required to pay estimated taxes in the subsequent year. 4. 4 How to calculate your estimated taxes: Now let's talk about how to calculate your estimated taxes. So there are a few different ways that you can come up with how much money you are required to mail the IRS every quarter Number one. You can base your current year's estimated taxes on your prior year taxes, even if you are not in business at that time. So let's say you started a business in the current year. In the prior year, you happen to be an employee and you work for a company because your business has no history and you have no idea how much you're going to owe. In taxes, you can base your estimated taxes on what you made the prior year's. Whatever you made with a company that you were working with, you can actually base you estimated taxes on that. So that sort of corresponds with sending equal payments. Whatever your total tax came to last year, you can divide it by four and send the IRS four equal payments. So if you didn't have a business in the prior year, then you could just take whatever you made last year with your employees. Divide that by four and then smell the ire s a payment every quarter based on your prior year. Tax liability. Now, if you own a business, let's say you've been in business for a while. You can do the exact same thing so you could look at whatever you made in the prior year. You can take that number, you can divide it by four, and then you can mail a payment out each quarter. Now the only thing about doing it this way is if you anticipate making a whole lot more money in the current year that you're in, that means that you are going to be severely paying less taxes than you are required to pay . Now, even though you'll be doing that, you will not be penalized for paying for under paying your your taxes because you are allowed to do that. The only thing is that when it's time to pay your taxes for the current year, you are going to find yourself owing MAWR off course than the prior year, which means that you're gonna have to come up with more money to cover your total taxes for that particular year. Another way to come up with your estimated tax payments if you look at what you made last year, so if last year you made less than $150,000 or $75,000 if you file married filing separate , then you are required to pay. Or rather, you can pay 90% or the current year taxes, or 100% off last year's taxes. Now, in order for you to satisfy the 90% off current year taxes, that would mean that you would have to actually calculate what your estimated taxes are going to be in order for you to pay the 90%. However, if you don't want to bother calculating your estimated taxes for this for the current year that your in then you could just go ahead and pay 100% off what you paid last year. So once again, you look at what you paid last year. You divide it by four, and you send out equal payments for every quarter. Now, the reason why you have the option to pay either 90% or 100 or 100% is because, let's say, for example, in the current year you're making way more money than you made last year and the 90% off. What you are making in the common near happens to be a lot more than the 100% off what you paid in the prior year, when you divide everything by four. Then, in order to give you that relief to not have to pay the 90% off the current year tax, you can go. You can go ahead and pay the lesser, which would be, ah, 100% off the prior year taxes. So that's an option now. There is a caveat to this. If, on the other hand, last year you made MAWR than $150,000 off, or more than $75,000 if you're married finding separately, then once again you are required to pay 90% off the comment, your taxes or, in this case, 110% off last year's taxes. So the difference is if he made 1 50 or less, you're only required to pay 100% of last year's taxes, while if you made $150,000 or more than you are required to pay 110% off last year's taxes . And, of course, the simple option is just to hire an accountant. So usually, if you if your income fluctuates a lot for a month for a month, then is really best to hire an accountant, Teoh, to calculate your estimated taxes for you. So let's say you have a job. Let's say your booth renter or you are a mobile stylist or you're a contractor or you have some sort of job where you never know how much money you're going to make on a weekly or in a monthly basis. Then you will want to calculate your estimated taxes every single quarter. That way, you can project how much money you you are going to. Oh, so the way this works is your accountant or you, or you would calculate your your taxes for that particular quarter. You're going to take that information, and you're going to use it to project how much money you anticipate making that year, and therefore you will pay taxes based on that projected number. So that's an option, and it's the best option for people whose income is very, very inconsistent. And, of course, the final way that you can calculate estimated taxes is to do it yourself once again. If your income fluctuates from month to month, then it's a good idea for you to sit down every quarter and calculate your estimated taxes and send a night. The ire s their portion based on your calculation. And if you're doing it yourself, you want to use some sort of estimated tax calculator because the estimated tax calculator is going to be formulated in such a way that all you have to do is plug in your numbers and everything else will calculate for you. Whereas an accountant knows exactly one inputs to use to come up with the correct estimated amount, you who is doing it yourself, you may not know all of the correct inputs, so you want to make sure that if you're going to use if you're going to do it yourself that you are using an estimated tax calculator that's going to properly help you calculate your estimated taxes. And during this class I'm going to actually demonstrate to you how you can use an Excel spreadsheet to calculate your estimated taxes. This particular spreadsheet is formulated for you for calculating your estimated taxes so you can actually use it and come up with the correct amount that you owe at the end of the quarter, and that's it for this section. 5. 5 Quarterly Estimated Tax Due Dates: now that you know the different ways that you can calculate your quarterly estimated taxes . Now let's talk about when these taxes are due so quarterly. Estimated taxes are due four times a year. Now I know that it stares quarterly estimated taxes. However, you're going to snow Tous that you're not really paying them per quarter because normally 1/4 is three months. There's three months in each quarter, but when you're paying your quarterly estimated taxes, the Onley payment that encompasses three months is the taxes that are due in April and September. Okay, so your first payment is due April 15th. That payment consists off January, February and March, so all the income that you made in those three months is due April 15th June 15. Your quarterly tax. Your arm seconds Quarterly tax payments are due that particular payments only encompasses April in May, so that's only two months. But it encompasses for your third quarter the estimated taxes. It's due on September 15th Andi for September 15th. That payment encompasses June, July and August, and finally your fourth quarter. The estimated tax payment is due January 15th off the following year, so in January 15th of the following year. You are paying your estimated taxes for September, October and November and December off the previous year. So, as you can see, even though they are called, quarter the estimated taxes, only two payments encompass three months. You have one payment that only encompasses two months and then one payments that encompasses four months. Don't ask me why they did that. I don't understand it. Sometimes it confuses me. So I have to go back and just make sure that I'm actually sending the payment at the right time. So those are the days and months that your quarterly estimated payments are due. 6. 6 How To Set Aside Monthly Estimated Payments: in this section, we're going to talk about how to set aside monthly payments for your estimated taxes. Now I'm only going to talk about the best practices. Of course, this is not something you have to do, but it is best practice. And the reason is because you want to make sure that you have enough money to actually make your payments when they are due, because if you leave your payment inside of your regular operating account, you might even be tempted to spend it. Or you might think that you have more money than you do. So in order to alleviate that from happening, it's best to open up a separate account and transfer the money from your regular business account into your tax business account. Now, I know this sounds fairly simple, and I'm giving you information that some of you are probably saying, Well, that's not too hard to figure out. We know that, Yeah, I do. I understand that, but sometimes we don't really do the simplest things. We don't really think about it. So I'm bringing this up just to let you know that it is really a good idea to try to separate. Any payments that you have are going through the IRS or to the state from your operating accounts, and this also includes sales tax. So if you happen to collect sales tax on products that you sell, or in some states, they they charge sales tax services like New York. If you happen to pay sales tax on either products or services, it's a good idea as well to take that money out of your operating accounts and put it into your your tax saving accounts this way there. There was no reason why you don't have enough money to fork over to the government when it's due, because if you don't do this and you find out at the end of the quarter, when it's time to pay your estimated taxes or sales tax, whatever the case may be you. If you don't have enough money to make these payments, then what's gonna happen is gonna roll into the next quarter. And now you're looking at having to find money for 2/4 rather than 1/4. And I always say it's a whole lot easier to come up with $2000 at one time than it is to come up with $4000 at one time 7. 7 Different Ways To Pay Your Quarterly Estimated Taxes: now, after calculating, are estimated taxes and setting aside to make sure we have enough to make our payment. When it's do now, we have to figure out how to spend it to the IRS. Well, there are three ways that we're going to be talking about, of how you can actually send your payments to the IRS. Number one. You can use the 10 40 ES, which is the 10 40 estimated voucher, the test that 10 40 estimated voucher. You would have to mail that along with a check to the Iraq's. Now, I don't know too many people that are still mailing things out, using regular mail or even writing checks. Now some people do. If that's your preference, that's an option for you. The second way to pay is you can actually just pay online. If you pay online, you will need to go to www dot i r s dot gov slash e. Pay all for those of you that are Officer, it's an age where you don't remember even typing in www. You can just you can just type in i r s dot gov slash e pay. Now, when you get to the eBay sites. There are two ways in which you could make the payment. One is through direct pay with the whip direct pay. The ire s will directly debit your bank account so they're going to go into your account, and they're going to debit the money directly from your account. Or you can pay using a debit or a credit card. So if you decide that you'd rather not have the irises hands all in your accounts, then you can just go ahead and without your credit cards, and you can make the payment that way. The third way to make your estimated payment tax is using a platform called the Elektronik Federal Tax payment system. That is the E F. T. P s. For short, This particular method is best four businesses or if you have large payments now, the only thing about using the this particular platform is that you have to enroll, and if you enroll, it usually takes a few weeks to set up. But once it's set up, it's pretty simple. You just go to the website and then you just make your payment directly from the actual site. Now I personally make my payments on this particular platform. So these are the three ways that you could make you a monthly estimated tax payments. And don't forget that you also have to make payments to the state. And I guess, depending upon what state your man, they may have different ways of making these payments. In the state of Georgia where I am, you could either male the payment in, but they prefer you to go in onto your accounts and make the payment directly from an accounts that you set up with the states. This particular class. Although I'm focusing on federal estimated taxes, you also have to pay your state estimated taxes on. I don't really talk about that because every state is different. So you want to go to your state's websites to find out how their quarterly estimated taxes work when it's do, and also what methods there are to actually make those state payments 8. 8 Estimated Tax Payment Penalties: This next topic is for everybody who has failed to pay their estimated taxes within the year. So when you don't pay your estimated taxes, the IRS normally charges a penalty for non payment. Now, let's look at what the penalties are for. Not making your estimated tax payments for not making estimated tax payments will cause you to have to pay penalties and interest if you are required to make payments for any given year. Now, I say, if you are required because if you remember, not everybody is required to make estimated tax payments. It all depends on how much money you made in the previous year, or whether or not you, even though the tax in the previous year, or whether or not you were even required to file an actual tax return in the previous year . And also if you owe less than $1000 in the current year that we are in if you fall under any of those categories and you are not required to pay estimated taxes, even if you make money in the current year and you have to pay taxes in the current year, the fact that you were not required to pay estimated taxes in the prior year may alleviate your requirements to pay it in the car madness. Under those circumstances, you will not be charged a penalty for not finding. Okay, So underpayment off estimated taxes tow Avoid. Under paying your estimated taxes, you have to number one. Pay at least 90% off your karma near taxes or pay 100% of the amount of taxes you old last year, whichever is smaller. So once again, if you pay 90% of your current your taxes or 100% off prior year, you will not be charged penalties paying 100% off prior years taxes. You can do this by just looking at what you made last year and dividing it by four. And sending the ire s a payments every quarter because you may decide that you don't feel like calculating your current your taxes. You don't feel like going through the whole process off calculating your current year's estimated taxes. Well, then you can just go ahead and depend on what you paid in the prior year. The exception to the 90% 100% rule. But I just spoke off is this? If your income is more than $150,000 per year, or $75,000 if you file married filing separate, you are required to pay ah, 110% of the amount of tax you old last year. So which means incident. You just simply dividing what you made last year by four and sending each payment to the IRS each quarter. You would look at what you paid last year, and you will pay 110% of that to the IRS, so you're going to take ah 110% of that. Divide that number by full and then mailed the essay payments each quarter. So if you abide by these rules, you will not. Beast saddled with estimated tax payment penalties and normally, the estimated tax payment, parent penalties show up on your tax return. So if you have penalties, let's say you haven't filed Europe. Your let's say you didn't file estimated taxes in that particular year when you felt when you file your tax return in in April or whenever you file it, you're going to see a line that says estimated tax penalty And that's where the penalty normally shows up now as entrepreneurs paying taxes four times a year, maybe a little bit challenging but proper preparation. Staying organized all year round and keeping your books tax ready can help make it a painless and achievable task. So staying organized and being tax ready means that you should have some type of accounting system that tracks your income any and your expenses. Because in order for you to calculate your estimated taxes, you have to know what you brought in and also what you spent. That way you can come up with your net income so you can then go ahead and calculate your estimated taxes. If you don't have this information that you won't be able to actually calculate estimated taxes. So staying organized means you're getting some type of accounting system, whether it be QuickBooks online, whether it be QuickBooks desktop, whether it be something as simple as an Excel spreadsheet, it doesn't really matter just anything that you need to do to actually calculate your income and your expenses. So that way you can go ahead and calculate estimated taxes for any given quarter 9. 9 Introduction To The Hands On Demonstration: in the next few sections, I'm going to demonstrate how you can actually calculate your own estimated taxes using a spreadsheet that I created. But before I continue, I would like to talk about the limitations off the spreadsheet. Now it's very important that you pay particular attention to what the limitations are. This spreadsheet, because if you four fall outside off the limitations, then you are not able to use their spreadsheets to calculate your estimated taxes. You can still use the spreadsheet for your bookkeeping because it is in addition to being a calculator. It also acts as a very, very simple bookkeeping system. So if you don't have any other way off maintaining your records on a yearly basis or on a monthly basis, then you can use this spreadsheet to do that, because he will automatically calculate all of your income and expenses for you. However, if you fall under these limitations, you are not able to use the spreadsheets to calculate your estimated tax is the 1st 1 is if your filing status at the end of the year, this single and you make $157,500 or less then you are able to use to spreadsheets to calculate your estimated quarterly taxes. If you make 157 1005 $100 more and your filing status is single at the end of the year, then you are able to use this spreadsheet. Number two. If your filing status at the end of the year is married, filing separately and you make $157,500 or less a year, you can use a spreadsheet to calculate your quarterly estimated taxes. If you're married, filing separately and you make more than 157,500 then no, you cannot use this spreadsheet to calculate your estimated taxes. Now, if you off tax filing status at the end of the year is married filing jointly and together you both make 350 consuming $315,000 or less a year. Then you can use a spreadsheet. If you are married, filing jointly and you make more than $315,000 then you cannot use a spreadsheet to calculate your estimated quarterly taxes. Now neither you nor your spouse if you are married filing jointly can receive a W two from an employer. So if you are a W two employees, you work for someone, and every week or every two weeks, every month you receive a paycheck. Then you cannot use this. You cannot use a spreadsheet to calculate your quarterly estimated taxes. And I say that because if you're married, filing jointly or if you are married, filing separately or if you are single and somebody in that mix has a W two, then you could not use the spreadsheet now. Married Fighting Joint Me The reason why the reason why you can't you, that uses spreadsheets if you'll spouse receive it received a W two is because in order for you to properly calculate your estimated quarterly taxes, you have to combine all of your income. Tree has the usual spouse's income and your income to calculate your quarterly estimated taxes because you guys at the end of the year file together. So that's the reason why, because you file your tax one to get the tax return together, you also have to calculate your quarterly estimated taxes together. So, in other words, the type of income that you receive In order for you to be able to use a spreadsheet has to be self employment income or some type of investment income. If it's W two income, you cannot use a spreadsheet. So those are the limitations off this spreadsheet once again, even with those limitations, if you decide you want to use a spreadsheet just as a bookkeeping system, you can do that. Okay, now the process is simple enough if you are good at following directions. So if you're good at following directions and you think that is something you can do on your own, then you can use the spreadsheets to calculate your own. Estimated taxes we have to do is follow this demonstration carefully and just follow along with exactly what I do. If you follow along with what I do, you should have no problems creating or calculating your own estimated taxes. So let's begin 10. 10 The Instructions Tab: Okay, so now that we've got all the other stuff out the way, let's talk about how to use the spreadsheets to actually calculate your estimated taxes. Now, some people may be a little bit intimidated when they download the spreadsheets, but it is not intimidating at all. As long as you follow my instructions, you should be OK. So when you first download the spreadsheets, you are going to the first tab that you want to click on is the instructions tab. The instructions tab explains how this entire template works. It explains everything you need to know in order for you to calculate your estimated taxes . OK, so it talks about the chart of accounts, what the chart of accounts is and what you need to know when you are actually on the chart of accounts. It also talks about the transaction screen. It lets you know how the transactions community is set up. What you should know before you start in putting transactions. The instructions also lets you know what the income statement worksheet is about and how you can utilize the income statement worksheet in order for you to actually begin calculating estimated taxes and then Finally, the instructions has very important information about quarter 1/4 tube quarter three aunts quarter for tabs. So before you start using the spreadsheet, please make sure that you read the instructions. As this class goes along, I am going to touch on what the instructions say. Because order for me to teach or rather, in order for me to share the information with you and to show you how to use this template . I have to do that. However, if you decide that you would like to use this template for your own your own personal needs , then make sure you read the instructions. And in the beginning, when you when you first start using the spreadsheet, you can use this video as a guide. So the next section we're going to be talking about is the chance of accounts. What is it and how does it relate to this whole big picture 11. 11 The Chart of Accounts Tab: in this section, we're going to be talking about the charts of accounts tab. So what is the chart of accounts? The chart of accounts are all of the accounts that you use for your business. So when I say accounts, what I'm talking about is, let's say, for example, you paid rent for the month. So in order for you to record your rent expense, you would record rent expense in something called the rent account. If you are. If you are recording your advertising and your marketing expenses, you also record those expenses in something called your advertising account for your marketing account or your promotions account. Same thing with your income. You're going to record your income in some sort of service accounts or in a sales account. So that's what the terminology account means as it relates to bookkeeping. So the chart of accounts houses all off your accounts. So in this case, we have very basic accounts advertising and marketing, office accounting fees, insurance equipment, rentals and so on and so forth. Now, as you can see, as you come down to Row 30 you can actually create additional accounts. So if you are on the chart of accounts tab, and you don't see accounts that reflect the type of business that you have. Then you can go in and you could make changes. Or if there is a particular accounts that you want to be able to use, that you can go, you can come in here and you could make the change that say, for example, you want to include booth rents so you would tie pain. So your hair salon and you collect booth rents from your stylists you want include booth France. You can get included here. In addition, if you scroll through the category names on the column A and there is an account that you don't use, you can change it. So let's say you never have any interest. So if you don't, if you don't pay interest, you don't have a loan out. You're not paying interest, and you know that you were probably not likely going to use this particular account. You can change the name from interest paid tow, whatever. You want to change it, too, so we'll just go ahead and change this to bank fees so you can feel free to make your changes now, this is the only time that you can actually make changes when it comes to the account to the category name, category type and also the type of transaction. You can only make your changes in here. So for any type of changes you want to make to your accounts to the name of your account, the type of exam category it is, you would have to do it in the chart of accounts tab. Now, the next column is the category type. The category tight basically just lets you know whether the accounts that you about that you are using is an expense account, whether it is a cost of goods account or whether it is a revenue account. So that's what the category type column is. Four. And then the final column is the type of transaction that belongs in this particular category. So for advertising and marketing, the question is, what type of transaction is that? Well, it's basically advertising and marketing costs. You have your office supplies. This is other business supplies. You have accounting fees. The type of transaction is payments for professional accounting services, so you can go down the list and you can further explain what type of transaction is related to a specific account. Now, this is for your own purposes. If you decide to add an additional account to the custom rose, you have the ability to replace the description with your own personal description. And you can feel free to change all of these descriptions to something that you understand or something that makes more sense to you. So that's it for the chart of accounts tab. Basically what the chart of accounts tap does. It is a backbone off your accounting system, so all of the transactions that you have will be will be housed in the chart of accounts tab. 12. 12 The Transaction Tab: So the next tab we're going to be talking about is the transactions tab. This is where all of the magic happens. This is where you record all of your transactions, and after recording your transactions on this tab, it flows automatically t to the income statement tab, which we're going to talk about next. So for the on the transaction tab, we have five rows. The first row is the category name. So when you are recording a transaction, you want to pick a category name. The category name field flows from the chart of accounts. So when you type a category in this field, it is coming from the chart of accounts. The next column is the category type. The category type is also part off the chance of accounts. As you can see, it explains it. It's an expense if it is a revenue, or if it is cost of goods sold and then we have the date. The date is very, very important. It's very important that you get the date correct, because this is how your estimated taxes are going to be calculated properly. If everything is based on the dates, so you have to make sure when you are typing in the date that you actually type the correct date, month and year, the month and a year are the most important things, and then you have your description. So after you recorded transaction, you might want to type of short description so that that way you can remember later on if you need to What? This transaction was full. And of course, most important, we have the amount. So the transaction worksheet the income statement worksheet and the quarter 1/4 to quarter three and quarter four worksheets all work hand in hand when it comes to calculating your quarterly estimated taxes. So what I'm going to do is I'm going to show you three different ways in which you can use the transactions worksheet depending upon the type off accounting system or how you track your books in your business, your salon or whatever type of business that you have. So there are three ways that you can use this worksheet if you don't have any other type of tracking systems. In other words, if you do not use QuickBooks online or you don't use QuickBooks desktop or you use no sort of tracking system to track your incoming expensive. You can actually use this worksheet to do that. So in the process of using, this worksheet is also going to calculate your estimated taxes. On the other hand, if you already have an accounting system that you use that say, you use QuickBooks, but the version that you used does not automatically track your income and your expenses. But you would like to be able to track your income and expenses, but you want to stick with using QuickBooks online. What What you can do under those circumstances is you can just take your monthly numbers and come to this worksheets and input your monthly numbers in order to calculate your estimated taxes. And I'll show you how to do that. Thirdly, if you use an outside accounting system once again, but you don't want to input your monthly numbers into the spreadsheet, then you could just wait until the end of the quarter. You can grab that one whole number that covers every quarter. So, for example, if we're talking about quarter one, you can grab your net income for quarter one. That will be January, February and March. Take that whole number, and you can input it into the spreadsheet. So, in other words, if you have an outside accounting system that you use, you can just use this spreadsheet as a calculator just as a way to calculate your estimated taxes. You don't necessarily have to use it for your actual bookkeeping once again. For those of you that don't have a bookkeeping system, you can use this as your bookkeeping system and you're going to get the same results. Your quarterly taxes are going to automatically be calculated, so I am going to show you how, if you are using it for your bookkeeping system, how you conduce that if you're going to be using the spreadsheet just as a means to calculate your estimated taxes. But I will show you how to input that information so it's going to be different, and you're going to see how that works and how all of that flows from the transaction worksheet onto the income statement. So let's put order this together and start doing some actual calculations 13. 13 Entering Transactions To Calculate Your Estimated Taxes: in the section. We're going to be working with the transaction sheet, the income statement sheet, and I'm going to show you what's the quarter one sheet looks like. But before we start adding transactions left, take a look at the income statement heat. So this is the income statement sheets. So all of it all of the transactions that you inputs in the transaction sheet is going to flow to the income statement sheets. Now keep in mind that you cannot directly enter numbers or enter information on the on this particular sheet. So if you attempt to enter a dollar amount on this sheet, this is what's going to happen. The sheet has been locked, and the reason why I locked the sheet is because if you accidentally changed a formula, then the sheet is no longer going to work correctly. So that means that your income and your expenses are probably not going to calculate correctly if you change the formula. And that's the reason why I locked the sheets and I put a password on there so nobody is able to actually on lock it now. The only area that you will be able to input information will be in under the growth rate area. And I'll tell you what, That four in a moment. Okay, so this is income statement sheet, and as you can see it, you can record income January through December. One other thing I'd like to note is that this particular spreadsheet you can actually bring in transactions from prior years and also for in future years. So if you if you click on this down arrow, you can see that you can pull in transactions from 17 from 18. We are currently in 19 and it is good, So Route 2000 and 24. So let's say you have not filed your taxes in 2017 or 2018 and you need to get your financials together. So your accountant is asking you to provide him or her with a profit and loss statement. Well, you can actually use this spreadsheet to go back and to input your 17 and 18 tax information. Or rather, you're 17 and 18 income and expenses. And that's the reason why I said earlier that when you are working on the transaction sheet , it's very, very, very important that you use the correct date that you use the correct year. Because when you input when you input transactions for a particular year Okay, when you are on the income statement sheet, whatever the year is in this area is the year of transactions that you're going to be looking at on the income statement. So, for example, if on the transaction sheet you record something for 2018 and then you come to the income statement, But in this area it says 2000 and 19 you are not going to see the transactions. You are going to have to switch from 18 to 9 from 19 to 18 in order for you to see the transactions. So you see what I just did? There are some transactions that have been recorded. Now these transactions that would have been recorded were recorded in 2000 and 18. OK, now, the reason why you didn't see it earlier was because we were on 2000 end. Well, we're on 17 now, but we will on 2000 and 19 you don't see it, but everything that was recorded for 2018 shows up on the spreadsheet when you change the date from 2000 and 19 to 2000 and 18. Now, if you want to see those same 2018 transactions on the transaction, she's then all you have to do is click on the filter by the date and then click on 2000 and 18 and then Okay, so now you can see all of your 2000 and 18 transactions. So once you have transactions from different years on the transaction sheet, whenever you click on the filter by the date, you are going to see the option to either show or to hide. So now we're showing Now if we decide we want to hide it and we don't want to see 2018 or we only want to see one particular year, then what you would do if you will click on the 2018 check box, and now it says, you see where it says select all. So you've you un selected all of 18. Make sure the select all is checked and then you click, OK, and then all of the all of the transactions that you don't want to see automatically disappear. Okay, so that's that portion off the income statement. And then one other thing that you can do with the income statement is you can project your growth. So let's say, for example, so we're still what? We're still on 18 here, so I'll go ahead and use these numbers to project growth. Let's assume that all of the months have been filled in. So if you use a 25% growth rate, that means that for that particular service item, you are going to go from making $25,000.280 $25,280 to $31,600. So you can also, so you can use this spreadsheet as a way to determine or to project your growth rate. Okay, so that's those are the two features that the spreadsheet has. And then let's look at quarter one tab, quarter one tab. This is what we're going to do all of our calculations. Okay, so we'll do all of our calculations on this sheet, and we'll come back to this when it's time to actually calculate our first quarter estimated taxes. But in the meantime, let's go back to the transactions sheets and let's go ahead. But let's go here first. And that us change the date that we're looking at from 2018 to 2000 and 19 because that's the year that were working in. And then I'm gonna go ahead and just get rid off the growth rate percentages because we don't really need that. Okay, now let's go back to the transaction sheet. Okay? So this is our transaction sheet. This is where everything happens. This is where we'll be in, put all of our transactions. That then flows to the income statement and then flows from the income statement to the quarterly taps quarter 1/4 to cause a 3/4 4 Okay, so he begins here. Now, if you are using this spreadsheet as your bookkeeping system, So if you don't have another bookkeeping system and you decide that you want to use this bread sheets to maintain your income and your expenses, here is how you're going to input the information. So the first thing you want to do is you want to pick an account. So let's say you want to pay for advertising, for example, for the first thing you want to do is click on the down arrow, right beside whatever column you're working in. So let's say you want to record an advertising expense, so you'll click on advertising than, of course, the category is expense. And then the dates were working in 2000 and 19. Let's say we paid for advertising on January 1st, 2000 and 19. Okay, so I'm going to record it that way. And then the description will say it was a Facebook ad and we paid $200 for the ad. Now, one thing you have to keep in mind is that when you are in putting amount for expenses, you have to use a negative number. Do not use a positive number. Positive numbers are only for money that's coming in. So any kind of income that's coming into you use a positive number. If somebody re funded something to you, then you would use a positive number. That means you're getting money back. But whenever you're paying money out, you have to make sure that you use a negative number. So we're going to use negative 200 which is how much we pay for our advertising with Facebook so we want to add another expense. Let's say we purchased office. The office supplies were going to use the accounts office. And then it's of course, it's an expense. You'll type in expense. And then that, say, we purchased the supplies on the 15th off January and we purchased just thinking. We purchase pens, pens and paper, and it cost us $50. So that's negative. 50. Now let's record some income. In January, we let's say we offered a service, so we're gonna pick service revenue, and then we are going to categorized as revenue. We received that revenue also on January 1st 2000 and 19 and the revenue waas now, depending upon how you are going to record your income. So if you're using this as a bookkeeping system, you have the option to record your income as it comes in, or you can record it at the end of the day. Now recording it for every single service is going to be a little bit monotonous, not monotonous, but a little bit time consuming, and it's just gonna take a lot out of you, so you can either record your income on a weekly basis. You can record it on a daily basis, or you can record it on a monthly basis. It just depends on what you decide you want to do. My advice is, if you're trying to monitor what's coming in on a daily basis, I would suggest recording your income daily. So let's say your service revenue for that particular day. Waas $500. Now in the description you can just you can type in various. If you decide you don't want to break things down, you can just type in various I can spell so various means that you are on Guy Still spelt it wrong. Okay, let's try this again. V A. R O. U s so various means that the service revenue came from various services. You could have done haircuts. You could have done color you could have done nailed. Well, you could have done. You could have done any number off services. Now, if you decide that you want that you would prefer to break the service down by actual type of service, then you could break this even further greatness down and say OK, service revenue service revenue and then you can you can break up the revenue by type of type of service. So you can say haircuts for that day you brought in $100 for haircuts and then you could do the same thing with color. You could do the same thing with highlights. You can do the same thing with nails. Any type of service revenue you had. You can go ahead and in, put it this way and then all of this information it's going to then transfer onto the income statement so you can see where it's service revenue is. $600. Your expenses advertising is 200. You office expense is 50. So everything that we in put it in transactions rolled into onto the income statement. So this is how you would input your transactions if you were. Or rather, if you are using this spreadsheet as a bookkeeping system on once you inputs one of your income, okay, for that's a January, February and March, then that automatically rolls over to the quarter one tab. This is where it begins to actually calculate your income, rather calculates your estimated taxes, and we'll come back for this shortly. Okay, so that's how you input transactions. if you are going to use this spreadsheet as your bookkeeping system. So now let us input transactions. For a person who already has able keep bookkeeping system on, all they want to do is to use the spreadsheets to calculate their coarsely estimated taxes . So what you would do under those circumstances and I would say, and I know I said earlier that you can easily use your monthly net income or you can use your quarterly net income, so I'm gonna show you how to do either one. So let's assume that you want to use your quarterly net income to calculates your estimated taxes. Or, rather, you want to use your monthly that income to input into the spreadsheet so you can calculate your estimated taxes for the first quarter for what you would then do is you will take your you look at your profit and loss statements from your accounting system and you're going to pull the net income. So whatever your revenue is minus your expenses, that is what you're going to use. So let's assume that your net income for the month of January was $5000. So what you would do here is you would go ahead and you would just just pick service revenue. You just going to pick service revenue? Okay, Category type is revenue, and then this is where you need to make sure that you use the correct date. So this is January's net income. So you want to use a January date, says January 1 of his January 31st 2000 and 19. And then you can put a description here if you want. In this case will just say January income, January net income and your total for January was $5000. That was your net income. Now we're going to input February income. So we're going to cheese service revenue again. That's a revenue. Now, this is for February, so we want to make sure that we use a February date. So we're going to use February 28 2000 and 19 and this is February's income, and we'll say in February we made $6000 and then finally we're going to input marches, net income, its revenue and up. Sorry. I used the wrong date here. This was supposed to be February, and I used January, so I'm telling you guys to be careful. Meanwhile, I'm I'm steady messing up. All right, so this is going to be from March, so we're going to use March 31st. And of course, this is March March net income. And that's it seemed that in March we brought in $7000. Okay, so this is what we made for the first quarter of 2000 and 19. Now, let's go to the income statement tab and you can see that it shows off all of our income for all of our net income for the first quarter. So we made a total of $18,000. Now, of course I remember because we're only using in that income and we just using this as a calculator. We don't have to worry about the expenses portion of this and all this information is going to then roll over to the quarter one tab and it's going to provide us with the information we need to begin calculating our estimated taxes for the first quarter. So this is how before I go before we end this lesson, let me show you what you need to do. If you decide that you want to use the calculator, but rather than in putting your quarterly net income, you just want to put one whole number and input the income for that particular quarter. So then what you would do is you would just click on on the category name. Then once again, we are going to pick revenue. So we also have sales revenue and we have service revenue. So for the sales revenue would be if you are selling products. So if you sell hair products or any type of products, then you can use the felt, the sales revenue revenue option. And then, of course, we have the cost of goods sold. So if you do sell products, then you're going to use the sales revenue to record how much money you know how much money you made from sales. And they're going to use a cost of goods accounts to record what it cost you to purchase the items that you sold. Okay, so we're gonna click on service revenue. We're gonna click on care category, of course, is going to be revenue once again. Now, since we are only using this spreadsheet to calculate out estimated taxes, and we have decided that rather than in putting all three months for foot for the first quarter, we just want to use our total net income for that particular quarter. So the quarter ends in March, which means you have to use a March date to input the actual dollar amount. Same thing if you, um, are putting into your second quarter net income, he would have to use the last day of the second quarter, which in this instance second quarter actually ends in May. So while January, February and March represents the first quarter, April and May represents the second quarter. So then you have to use the May ending date for second quarter. And if you read the instructions, you are going to see where I explained what months equate toe walk, what quarters? That's why I said it's important that you had to make sure you read the instructions before you get started. So in this case, we're still working with the first quarter. So we are going Tonto delete these dollar amounts first, so we are going to use the date off the last day of the quarter, which is March 31st 2000 and 19 and then this description will just say quarterly net income and the total amount will say was $18,000. That's how much we made for the quarter. And as you can see, when you move to the income statement sheet, you see that the $18,000 shows up under March, which is the third matures Peace end of the third quarter and we click on court quarter one . We can see once again the income rolled over here into the quarter one tab, and this is where we're going to eventually calculate our estimated taxes. So this is how you use the transaction sheet to begin the process off, calculating you out your quarter one taxes. So the transaction sheet, whatever you input in the in the transaction sheet is going toe automatically flow to the income statement, and then the income statement information automatically flows to the quarter one sheet, and this is where or the actual calculations occur. So in the next section, we're going to actually calculate our estimated taxes. 4/4 1 14. 14 Calculating Your Quarterly Estimated Taxes: Okay, so now we're going to start, actually calculating are estimated taxes. But before we start doing that, I want to show you what the quarterly sheets look like before transactions have been inputted into the spreadsheet. So as you can see, the transaction spreadsheet is empty. So we have We have not yet started, including a nation's actions. The income statement is also blank. But that's because no transactions have been inputted into the spreadsheet. This is what the actual quarterly sheets look like. Before you start importing transactions, the entire sheet is blank. Now we have some highlighted. Highlight itself are highlighted in aqua or blue ever. This color is, and these are the cells that we can actually input numbers in all the other cells on the sea. Column have been locked. So if you try to impotent number, it's going to give you a warning sign the only cells. But you can input numbers in our the aqua colored cells. Okay, over here we have Alice standard deduction table. This is a standard deduction table for the current year that we are in. This normally changes every single year. So while you can probably still use the spreadsheets to calculate your estimated taxes in subsequent years. You do have to make sure that you have the correct standard deduction for that particular year that you are in because it changes every year. So in this case, we're going to be pulling out standard deduction from this section over here and then when we're calculating our tax, this this is the tax rate tables for calculating out tax. We have four tax rate tables, one for single filers. So if you if you file as a single taxpayer, you're going to use this particular tax table. If you file married finding jointly, you're going to use this table. If you file married filing separately, you're going to use this table. And finally, if you file head of household, you are going to use this table. And that's because depending upon how you file your tax rate is going to be different. Okay, as the spreadsheet calculates our quarterly taxes, it calculates quarter one. Once quote Quarter one has been calculated. It rolls into quarter two, so each quarter actually feeds off the other. So, for example, quarter to estimated quarterly tax payments are calculated using the numbers from quarter to and also using the numbers from quarter one and Ben same thing with quarter 3/4 3 When calculating the quarters of equal estimated tax payments, it uses quarter one and quarter two figures to determine what you should be paying in quarter three. And finally, when you're calculating quarter four payments it uses quarter 1/4 to quarter three, it all rolled into court. Afford to determine how much of the payment you should make in quarter for So what this means is every single quarter rolls into the next, so they are all interconnected. So now that you've seen what the quarterly worksheets look like with no data, let's start filling in the data and start calculating our quarterly estimated taxes. Okay, so I went ahead and I pre filled the transactions. Now, in a prior lesson, you saw how to actually record transactions on the transaction screen, so I didn't want to have to do it all over again, so I went out. What I did is I pre filled the construct this transaction worksheet, and of course, we were calculating quarter one. So which means that the transactions are from January 1st through March 31st and that is what quarter one encompasses. So I included all of the revenue that we received in January and, of course, all of the expenses that were taken. Same thing for February and same thing for March. Now, as you can see the way that I fill this out for service revenue, I just used the category service revenues. All of the service services went into the service revenue accounts. And then, of course, that's a revenue and the dates. And remember, you have to be very, very careful that you used the correct date because this is how I will. Quarterly estimated taxes are calculated that I calculated based on the date to the date, must be correct and then But under description, I included what the revenue was four. So with for haircuts before color, partial highlights by a large hope I spoke. I spell that right blowouts, and then I also included sale of products. So we sold some 10 6 ounce of 80 shampoos and 15 8 ounce evaded conditioners. So I included that, And in addition to including including the product, I also included cost of goods sold, so the cost of goods sold is made up off whatever it costs us to purchased. Purchase our product. So, for example, with the Zeta shampoo, we sold it for $600. And normally, when it comes to retail in our industry, the norm is to market up 100%. So then, based on that, the cost of goods sold would have would have been $300. So that's what we included here. The cost of goods sold for both the baby shampoo and for the evade A condition. And then we had our normal expenses, of course, studio ranks, which was $1000. And don't forget, whenever you're recording and expense, you want to make sure that you use a negative number. So we did that for all the other months. That's February, January and 4 March. And once you have recorded all of your income and your expenses, all the information now flows to the income statements. So this is where everything flows to. So as you can see, the only month that are filled out our January, February and March, that's because we're only calculating quarter one. And so what we made for the month of January, we grossed 9007 19,875. That's what we grossed. And we netted 15,350 off. The all expenses were accounted for. So now we want to calculate our estimated taxes for the quarter. Now that we've filled out January, February and March, all of that data automatically flows to the quarter one sheet. So based on what we made for the first quarter, this worksheet is telling us that we are estimated or we are on track to making $61,400 for this particularly year. Okay, so that's how estimated taxes works. It takes everything that you made within a time period, and it projects that amounts. And in projecting it, it's saying OK, so based on what you've made for the last three months, we anticipate that you are going to make $61,400 provided nothing changes. And that's the reason why it's important that we calculate our taxes every quarter because we know that in the next quarter were more than likely not going to make 61,000 is going to be different because you just never know what could be busier. We might be slower, We just don't know. And that's the reason why we calculate the estimated taxes so that we try to send the government as close to what our tax payment is going to be at the end of the year. So it's saying that is anticipated was projecting that we're going to make $61,400 came. So based on that, now we want to calculate our estimated taxes on that dollar amount. What's the next one other thing? If you have other income like, say, rental income, will you received unemployment income or you see alimony or some sort of income outside of your actual business income? You're going to include that online. Six. This is where you include that. In this case, we're not bothering with that because there's no other income which is dealing with our actual business income. So then the next thing that we do is we now have to include adjustments and credits for what is that? Adjustments. Adjust our income and therefore reduces our taxable income by a certain percentage while credits reduce our actual tax dollar for dollar. So in order for us to calculate our estimated taxes and to calculate in such a way that we asked We are as closest powerful because keep in mind all we are doing as we are calculating estimated taxes estimate, meaning that it may not be exact. Or in a matter of fact, it's probably not going to the exact, but it's going to be as close as possible. And that's what we're trying to do with trying to get close as possible toe what our tax liability is going to be for this particular year. So don't expect that is going to be. It's going to be the exact same thing. Dollar for dollar. You might be a couple of dollars off. You might be a couple of $100 off. It just depends on how well you actually estimate your taxes. So in order to try to get the best estimate, what we want to somewhat mirror while our tax return is going to look like so we have a couple of adjustments that we may have to include, and also we have we have from credit that we may be taking How do we determine what our adjustments are going to be well on this worksheet. There are four lines for adjustment. The first line is for self employment, which automatically calculates there's nothing you have to do with that. It automatically calculates itself. The only cells that you may have to fill out are the ones that are shaded in Akwa deductible health insurance. So do you have Do you pay? Health insurance? Are US self employed individual that that pays health insurance? Even if you pay health insurance and you're self employed, you may or may not be able to take the deduction. It just depends there. Is there a couple of rules that, for example, let's say you are married on and you have your own business and your husband works for a company. Okay, Now in his company, he has health insurance, and the company offers his family that will blow BU the wife and all the husband or the wife, whichever the case may be and the Children they offer. The company offers all of you the entire family health insurance, but you are self employed. Person decided that you don't want to accept health insurance that the company is offering . Under those circumstances, you are not allowed to deduct your health insurance. Okay, because you are being offered insurance by your husband's company and you've turned it down , which means that if you decide to buy your own insurance, you're not allowed to take the deduction under. Give me. Under those circumstances, you would leave this blank. Now, In my case, I pay health insurance. So therefore, I my husband is also self employed, so there is no one offering ourself insurance, so I I would include my health insurance on this particular line. So let's assume that you do have health insurance, so you're going to include how much you pay for health insurance, so you'll take the number. Let's say you pay $500 a month, you're more supply. Multiply that by 12 and that's what you pay. So we'll go ahead with 707 116 and then the next deduction is self employed, Sepp. So if you're paying or you're paying into a retirement accounts and you are self employed, you are allowed to take and not really you're allowed to adjust your income for for the payments that you make. Now, keep in mind that if you're self employed, you're not allowed to take more than 25% off your actual self employments net income. So in that case, let's just seem to take it to the max, and you contributed 25% off yourself. Employment that income. That would mean that your you would be allowed to adjust your income for the 25% off the 56,703 which would be 14,000 1 75 So that's the amount you can adjust your income by. So whatever you pay in that say it's just $5000. You can adjust your income by that now, all other adjustments includes everything else, and that includes a list of items. And here is the list to adjustments to income. Now, if you don't have any adjustment, let's say all you have is health insurance, and maybe you contribute to a retirement plan. Then you don't necessarily have to look at this, particularly sheet. However, if you have other adjustments, or if you're not even sure if you have other adjustments that what you want to do is you want to take a look at your tax return. Okay, one of your tax return for 2000 and 18 and you want to pull out schedule one off your tax return. This is where you're going to pull all of your adjustments from. So go ahead and pull out your schedule one from your tax return before you continue filling up this particular section. Okay, now that you've done that, everything within adjustment to income you are going to include on the spreadsheet. Now, when you are calculating your adjustment to income from your schedule one, here's what you need to make sure you don't do now. As you can see on the actual spreadsheet, we have a line for the deductible part of self employment. We have a line for deductible health insurance, and we have a line for self employed Sepp Simple and Qualified plans. So I have marked on the schedule one that those same lines that are on the actual spreadsheet, as I marked them by saying, has a separate line. So has a separate line means that there's a separate line on the actual spreadsheet where you're adding up. The total amounts off adjustments from your schedule. One you do not want to include line 27 Line 28th or lying 29 because lying 27 buying 28 Line 29 already exist on the spreadsheet. So you want to add everything else that's going to be in the adjustment to income section, with the exception of these three lines, once you add everything that you're going to include it online. 12 off the spreadsheet. So the Line 12 says all other adjustments. So that's everything with the exception off these three adjustments now, the several of you that may or may not have any adjustments in this area, but you just want to make sure that you don't because we're trying to make sure that our calculation is as close to accurate as possible. So that's how you will use the Schedule one. You're going to use the schedule. Want to pull the adjustments to income, which you are going to include on the spreadsheet as an adjustment to income. Remember, do not include thes three adjustments that you see under spreadsheet and that I marked on actual schedule one. Okay, so now that we've done recording adjustments to income, the next thing you want to record is your standard or your itemized deduction. Now, if you are using the standard deduction, then you're going to grab that information from over here Now, whether or not you use the standard, all itemized deduction is going to depend on your total itemized deductions versus your total standard deduction. Now, if you're going to be using your standard deduction, then you're gonna grab the number from over here. In this case, let's say that the person who was filling out this worksheet is married but filed separately. Then your deduction is going to be $12,220. If you are married, filing jointly and you are including your husband, you and your husband are calculating your estimated taxes together. Remember, both of you have tohave business income. Remember, I said earlier in one of the other sections, If your husband or if your wife, depending upon who is actually self employed who isn't receives W two income from an employee, then you cannot use their spreadsheets. I will say, Just stop now. You can't use a spreadsheet, but if both of you are self employed, then you can actually calculate your estimated taxes together. And in that case you're going to use $24,400 if you are head of household. So you have Children and you file head of household. You're going to use $18,350. So in this case, we're going to go ahead and use $12,200. So lets include that here. Now, remember the itemized deduction figure that we're using? If, for 2000 and 19 Now, if you're not sure whether or not you used the itemized or the standard deduction in the prior year, then you want to take take a look at your tax return to see what you used. So right now we're calculating estimated taxes for 2000 and 19 which means that you will be looking at 2000 and 18 stocks return to see whether you used the standard deduction or whether you use the item, my seduction, and you will get that information from the page one of your tax return. Okay, so is the main page of your tax return that has all of your information, has your name. You lost your first name. Last name your Social Security number on your dependence Okay, that is your the first page of your tax return. And you want to go to line eight, like, eight. Standard deduction, itemized deduction. Okay. In this case, this person is married fighting jointly. So they used the standard. Sorry, they used the Yeah, the standard deduction, which was $24,000. It was 24 if 24,000 watts, $24,000 in 2018. But of course, in 2000 and 19 that has gone from $24,000 to $24,400. So, in case you are not sure whether you use the itemized or whether you used the standard once again, you want to come to page one of your tax return, look at line eighth, and it's gonna tell you exactly what you used. So now that we've included all of our adjustments to income and we have included our standards deduction, the next thing is to calculate what our tax is going to be for this particular quarter. That how do you do that now? Because this person is married, filing separately. In order to calculate the correct tax, you're gonna have to He's gonna have to use your He is going to have to use the tax table for married filing separately. There are four different tax tables. One is for a single filer, so if you are single, you're going to use the tax table for stink a single filer. If you're married filing jointly, you're going to use the tax table for married filing jointly. If you are married, filing separately, you're going to use the tax table for married, filing separately. And then if you are head of household, you will be using the tax table for head of household because the tax rate is different depending upon how you file. In this instance, we're going to be using the tax table for married, married, filing separately, since the person who was filling this out, or the person who is calculating his or her estimated taxes is using that particular finding status. So how do we do this? All right, now, let's go back here now. In order for us to file or to find out how much our tax is going to be, we have to first look at our taxable income. So are taxable income is 18,377. Okay, that's the first thing you need to do now. The next thing is, you want to try to find out at this taxable income. How? What is your tax rate going to be? Well, let's scroll down and have a look. So married, filing separately and you made your taxable income is 18,377. That means that you are going to fool in the 12% tax rates bracket because everyone who's taxable income is between $9701.39,475 dollars has a tax rates off 12%. So now how do we actually calculate our tax is going to be well, here is how we do it first. You want to get a calculator so you can actually start the calculation process. Your taxable income is 18,000 377. So that's the number that we're working with now. Your tax rate is 12%. So what is this telling you? Here's how you calculate your taxes, food. What you're going to do so is your tax rate is 12% off the top you already know that you're going to, you're going to be paying tax of at least $970 so you're gonna You're gonna be pain. So let's go ahead and include $970 here when we know that we're going to be paying tax of at least $970 plus 12% off the amounts over $9700. So when it says, plus 12% of the amount over $9700 What this is telling you is you are going to subtract 9000 $700 from 18,377 on. Whatever you have left over is what you're going to multiply by 12%. So let's do that on the calculator. So let's take $18,377 let's subtract 9000 $700. That leaves us with $8677. This means that we're going to pay 12%. You have to multiply this amounts of $8677 by 12%. Okay, so let's do that. So 8677 times 12%. And we'll just do it using a decimal 0.12 point 12 That total is $1041. Okay, so let's go in and take. That's 1000 $41. 24 cents. They were gonna add the $1041.24 to 970 plus 9 70 So that is what? Our taxes. Our tax is 2000 and $11. So once you can't once again, how do we come about this number? Okay, so our taxable income was 18,377. OK, which means that our tax rate is 12% because 18,377 falls in between $9701.39 $9475. So we already know that this is what we're working with. Okay, so we know because we made 18,377 we're gonna at least pay $970. Okay, so that's that's what What you see here and then is telling us that we're gonna also multiply by 12% any amounts. That is over 9700. That's where we've be subtracted. 18,377 from 9700. And whatever the amount walls, we multiplied it by 12% and came up with $1041. We added the $1041 to $970 and that gave us 2000 and $11. So that is what our taxes. So now we scroll up and we include al attacks on Roe 19 where it says tax. Okay, so this is what we're gonna We're gonna include the $2011.24. So this is what? Our taxes. There's one other thing we have to figure out before we determine whether or not this is what our estimated tax payments are going to be. We have to see whether or not we are entitled to any credits. Now, what are credits? Credits could be earned income credit. It could be child tax credit. It could be the credit. Full child expenses. Child can expenses. Now, how do we determine once our credits are? Well, once again, you're going to have to pull out page one off your tax return and to remember page one. Page one is the same page that we used when we were trying to determine whether or not we used the standard deduction with the itemized deduction. So Page one is we're gonna put our credits from So you're going to go to Page one of your tax return and you're going to look at lying 12 and lying 17. Whatever is on 9 12 and line 17 it was. Add those two numbers together and you're going to transfer that number two line 20 off the worksheet. So whatever total you get between Line 12 and line 15 off page one off your 10 40 tax return is the amount that you are going to record for the credits that you received in this instance, there are no credits there, no credits to record. So we're going to leave everything as is so we are pretty much done calculating are estimated taxes for the first quarter. So based on all of our inputs, the sheet is telling off that our estimated text four 2000 for the first quarter is 2672. So what this is telling us is that if we make $61,400 in 18 4019 our total tax for the year is going to be $10,686.78. And therefore, the estimated taxes and we will have to pay for the first quarter is 2672. Now, As you know, it will be so much easier to come up with 2000 $672 every quarter. And it would be to come up with $10,000 at the end off the year, rather $10,686 when it's at tax time. That's why it's really important that you pay your estimated taxes so that where you're not struggling at the end of the year or rather in April, trying trying to come up with the total amount that you go so you're so basically you estimated tax for the quarter is $2600. Now remember, during one of the early earlier lessons, I said that if you want to use a spreadsheet simply as a calculator and not as a bookkeeper , A simple bookkeeping system not to track your income and expenses. You can do that. So remember, if you have a system outside of this that you already used to track your income and expenses. But that particular system does not also calculate your estimated taxes. You can use this blood shed to do that fill. In that case, you would not have to include all off the transactions that you see here. Remember, I showed you how to do that. So what we're going to do is we're going to take the numbers the net income for each month , and we are going to suggest use the net income for each month to actually calculate the your quarterly estimated taxes. So what this means is you're just using the spreadsheet as a calculator to help you calculate your quarter the estimated taxes. So we've recorded all of the net income for the first quarter. I just went ahead and used the net income amount. So for January, we recorded $5775. As January net income we recorded February sent income and we recorded March net income. Remember, we used the exact same figures that we had when we actually included transactions on this sheet. But as you can see, if we flip over to the income screen, the actual net income for the first quarter is exactly the same. Okay, now, also, the quarter one taxes our quarter, 1/4 1 taxes are also the things As you can see, we still have $61,400 as our business net income. So basically nothing changed. Okay, nothing changed on the quarter. One calculation, the only thing that we did differently was that we used the net income for the entire months rather than recording individual transactions for each month. So this is for a person who is trying to use the system or who who wants to use the system as nothing but a calculator. And then the third way, if you can remember, is for a person who doesn't even want to go as far as recording each month income all they want to do is to calculate how much they made for that entire quarter and just use that one number to calculate the estimated taxes. So in that instance, we're going to do a little bit differently. Okay, so I've removed all of the transactions so before we actually include that one number, let's take a look at what quarter ones she looks like before any amounts are recorded. As you can see, the worksheet is blank. For now, let's go back and let us record the transaction. But this time we are just going to use the one number, the total net income for all 3/4. And that amount is 15,350. Now, remember, if you are using this and you are, all you're doing is using that one number for the entire quarter. You have to make sure that you use the correct date. So the first quarter ends on March 31st for the first quarter is January through March 31st . So because we are only using the net income for the first quarter, we want to make sure that we use the dates off March 31st. Well, sometime in March, safe March 31st 2000 and 19. Okay, now that the amounts that we're bringing over is the net income for the first quarter, which was $15,350. So now let's move over to the actual Well, let's go to the income statement. First, you can see that the input was for March and let's go to quarter one. And now you can see has re populated with what the total expected income is for 2000 and 19 and then you would go ahead and do the It's that same thing when it comes to fitting out these blank areas. So what we had we had our we had our health insurance at 7 7000 $716. We also had our self employment contribution adjustments in the amounts of $14,175. And then we had our standard deduction at $12,200 and our taxable income. I'm sorry. That's 12,000 $200 not to 20. So are taxable income is exactly the same as when we actually impotent our transactions individually for every month, compared to when we used the net income from January, February and March, and now where we combined the first quarter income January, February and March and implicit as one whole number our taxable income stays exactly the same, which is $18,377. And we established in our initial calculation that our tax rate based on that is 2000 and 11 and therefore estimated taxes is exactly the same 2672. So, as you can see, no matter how you input your transactions, whether you decide that you want to import the transactions on a monthly basis because you've decided to use the spreadsheet as a bookkeeping system or whether you decide that you want to use this spreadsheets just to calculate your estimated taxes, the numbers come out exactly the same. So remember, when you are calculating estimated taxes, every single quarter builds on the other. So if you took on quarter to and you look at this number, this number means absolutely nothing. Nothing means nothing for the count. None of the calculations are accurate, and the only time that the calculations are going to be accurate would be after you have inputted Georgians actions for April and May. Because the second quarter is made up off April in May. So once you've included your transactions for April in April and May. Then the information that you're looking at on the quarter to tap are going is going to be accurate and the same thing with quarter three and quarter for everything builds on each other. So until the transactions for that quarter has has been completely impotent, you cannot use the numbers on the spreadsheet. In this case, the only completion that we have come to is for quarter one, which is January, February and March, and therefore these numbers are correct. So that is how you use this friend, she to calculate your estimated taxes. If you have any questions, please don't hesitate to reach out to me and one of a note before I wrap it up. If you are using adjustments and credits from your prior year tax return, only use those numbers if your tax situation is the same as it waas in that year, for example, if in the prior year you qualified for a child tax credit, but in this year you don't qualify for the child tax credit, then don't use that figure to determine your estimated taxes for the Carmen Year, because if you do, that is going to completely throw off your calculation. In addition, if in the prior year you has an adjustment to income because you had health insurance. But in the current year, where you are actually calculating your quarterly estimated taxes, you did not have insurance. Then do not take the adjustment. So when you're looking at your adjustments and you're looking at your credits, you want to make sure that those adjustments and those credits are going to be relevant in the year that you are estimating your taxes. Because if you are using those adjustments and those credits because they will on your prior year return, but they're not going to show up on the current year return, then you are going to throw off your your calculation and your calculation will more than likely be incorrect. So keep please keep that in mind. 15. 15 Final Message Regarding Future Updates: So we've come to the end of this course, and I'd like to thank you for taking the time to watch the entire course if you watched it on. I hope that the spread sheets will be of help to you when it comes to calculating your estimated tax payments. And I would like to say that as you noticed that the tax rate table was for 2019 and also the standard deduction deduction table was also for 2000 and 19. So every year I'm going to update this spreadsheet, and I'm going to update it with a new tax table for the year that we are in. So I will update it for 2020 come next year, and I'm also going to update the standard deduction sheet for the year that we are in. So we are commonly in 19 so I will be updating it next year for 20 on. I'll keep doing that out of the years go by and also you may have noticed on the spreadsheet that that there was a section that said State estimated taxes. Well, I decided not to go into that because every state is different Every state has different rules and regulations. Every states have has different credits, so it would be too confusing to try to include state estimated taxes when you're dealing with 50 different states. So my advice to you when it comes to your state taxes is to just look at your prior years tax return. Take that information divided by full and then just send it. Stender states payments every quarter, and I think that's the best way to handle your state estimated tax payments. Once again, thank you for watching my class and hopefully you learned something, and I hope the spreadsheet would help you calculate your SME to taxes in the future.