How Tax Assist estimates your taxes

How Tax Assist estimates your taxes

Where do you find your quarterly tax payment amounts?

Every year, when you file your tax returns, the IRS sends you quarterly tax estimates on half-page payment vouchers. The IRS calculates the minimum amount of what you should be paying each quarter in the current year based on your previous year’s tax liability. 

To find this number, simply look at your tax returns from last year and locate the Quarterly Payment Vouchers. Enter this amount into your tax settings in your Lendio account.  Note, that this number will change from year to year, so please remember to update it annually.

The image below is what it typically looks like from your previous year's return. If you are just starting your business and have not filed your taxes before, you can enter $0 for this amount.

How to calculate your tax liability estimate

When you enter your quarterly payment amounts for the IRS and your filing status, we look up your tax rate according to the most recent IRS publication. This calculation is then combined with your Adjusted Gross Income, meaning your revenues minus your expenses. We also add back 50% of your Meals expenditure as only this much is considered tax-deductible. 

We rely on your input to produce an accurate number. As long as you enter the following items correctly, our tax estimate will be considerably more accurate:

  1. Your tax filing status

  2. Your quarterly payments (assuming you are paying them promptly and consistently to the IRS)

  3. Your revenues, if you are making money from other sources, such as from another business or selling personal items on eBay, your estimate will NOT be accurate.

  4. Your expenses, if you are leaving out real operating expenses, like any bills you are paying for your business on personal credit cards, we won’t be able to calculate an accurate Gross Income.

Limitations of our tax estimate tool.

Please note that our tax estimate tool is designed for LLCs and Sole Proprietors only and will not cover corporate tax estimates or non-profit estimates. 

These estimates will only work if you have entirely separate business accounts from your personal ones, and ALL of your business’s accounts are linked to your account.

Also, the estimates are only for one business. So if you are running multiple businesses in separate Lendio accounts, the tool will not accurately reflect your correct liabilities. 

This feature is intended for US-based businesses only, it will not accurately estimate Canadian tax liabilities. 

We are limited by the information entered into our system, and the local tax code’s complexity. The following are items we cannot take into consideration when estimating your taxes, which may cause our numbers to not be accurate for you:

  1. State and local taxes in this estimate. This tax estimate is for Federal taxes ONLY. 

  2. Off-book deductions such as business use of home or automobile mileage as there is no place for these details in our system

  3. Off-book tax credits such as R&D credits. 

  4. If you altered your chart of accounts and are not using the default account for Meals & Entertainment, we will not be able to deduct these expenses properly.

  5. Our tax estimate tool is designed for LLCs and Sole Proprietors only and will not cover corporate tax estimates or non-profit estimates. 


Lendio does not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only and is not intended to provide and should not be relied on for tax, legal, or accounting advice. You should consult a tax, legal, and accounting professional before engaging in any transaction.

Written by Success-Team Updated over a week ago

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