having problem with question47. Darrell owns a consulting business and has an estimated annual income of $63,000. his social security tax is 12.4%, medicare is 2.9%, and his estimated federal income tax rate is 22%. how much quarterly estimated tax must darrell send to the irs for the first quarter?
First, figure out his quarterly income from his yearly income. Just divide it by 4.
Then multiply the quarterly income by each of the three tax percentages, to figure out how much tax he owes for each one. Then simply sum the 3 results to get the total tax for the quarter.
13,860
To calculate Darrell's quarterly estimated tax payment for the first quarter, we need to determine the portions of his income that are subject to each tax and then calculate the taxes individually.
Step 1: Calculate Social Security Tax
The Social Security tax rate is 12.4%. However, this tax only applies to the first $142,800 of annual income (as of 2021). Therefore, we need to determine the portion of Darrell's income subject to this tax.
Since his estimated annual income is $63,000, and this amount is below the taxable threshold, we can calculate the Social Security tax as follows:
Social Security tax = (annual income) * (Social Security tax rate)
= $63,000 * 0.124
= $7,812
Step 2: Calculate Medicare Tax
The Medicare tax rate is 2.9%, and there is no income limit for this tax. Therefore, we can directly calculate the Medicare tax without any adjustments.
Medicare tax = (annual income) * (Medicare tax rate)
= $63,000 * 0.029
= $1,827
Step 3: Calculate Federal Income Tax
The estimated federal income tax rate is 22%. However, we need to consider that this tax is progressive and uses a marginal tax rate system. To calculate the tax, we need to apply the tax rate to the portion of income that falls within each tax bracket.
To make this calculation more accurate, we would need detailed information on Darrell's income breakdown and deductions. However, since we only have an estimated annual income, we cannot determine the exact amount of federal income tax. Therefore, we will use the estimated annual income of $63,000 to calculate the quarterly amount.
Federal Income Tax = (annual income) * (Federal income tax rate)
= $63,000 * 0.22
= $13,860
Step 4: Calculate Total Estimated Quarterly Tax
Finally, we can add up the amounts of Social Security tax, Medicare tax, and federal income tax to get the total estimated quarterly tax payment:
Total Estimated Quarterly Tax = Social Security Tax + Medicare Tax + Federal Income Tax
= $7,812 + $1,827 + $13,860
= $23,499
Therefore, Darrell should send an estimated tax payment of $23,499 to the IRS for the first quarter. Keep in mind that this is an estimate and may vary depending on the accuracy of the income breakdown and deductions. It is always advisable to consult a tax professional or use online tax calculators to get more precise results.