Can I deduct state quarterly tax payments as a business expense for my sole proprietorship?
Hey everyone - so I started my own photography business last year and I'm dealing with quarterly taxes for the first time. I'm totally confused about what I can and can't deduct as business expenses. Specifically - are my state income quarterly tax payments deductible against my business income? I'm operating as a sole proprietor right now but wondering if forming an LLC would change anything about the tax deductibility. The quarterly payments are killing my cash flow so I'm trying to figure out if there's any way to offset them. Thanks in advance for any help!!
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Connor Murphy
Great question about your photography business! State income tax payments (including quarterly estimated payments) aren't deductible as business expenses on your Schedule C regardless of whether you're a sole proprietor or have an LLC. State income taxes paid for your business income are only deductible as itemized deductions on Schedule A, subject to the $10,000 SALT cap (State And Local Tax cap). This is true whether you make quarterly estimated payments or pay at tax time.
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Yara Sayegh
•Wait I'm confused. So if I have an LLC taxed as a sole proprietor and pay state taxes on my business income, it's not a business deduction? That seems weird since it's directly related to my business. Would this change if I elected S-Corp status instead?
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Connor Murphy
•The business structure (sole proprietor vs single-member LLC) doesn't change this treatment - both file Schedule C and both have the same limitation. State income taxes are considered personal taxes, even when they're on business income. If you elected S-Corp status, the corporation itself doesn't pay state income taxes on its profits (the profits pass through to you). You as the shareholder/owner would still pay personal state income tax on the income, which would still fall under the SALT limitation on Schedule A.
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NebulaNova
When I first started my consulting business, I was so confused about this too. I spent hours trying to figure out what was deductible where. I finally gave up and used https://taxr.ai to analyze all my business documents and tax situation. They explained that while federal self-employment tax is partially deductible as a business adjustment, state income taxes (even on business income) are only deductible as itemized deductions on Schedule A with that $10k SALT cap.
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Keisha Williams
•Does taxr.ai actually help with quarterly payment calculations? I'm always worried I'm paying too much or too little, and the penalties freak me out.
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Paolo Conti
•How does taxr.ai work with unusual business situations? I run three different sole proprietorships and have rental property income too - makes my quarterly calculation a nightmare.
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NebulaNova
•Yes, it helps calculate your quarterly payments based on your profit projections and previous year's tax situation. The tool runs different scenarios so you can see exactly how much you need to pay each quarter to avoid penalties while not overpaying. For complex situations with multiple businesses, that's actually where it really shines. It can separate all your income streams and show how they interact for tax purposes, then calculate the proper quarterly amounts. It saved me from a serious underpayment penalty last year when my side business suddenly became more profitable.
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Paolo Conti
Just wanted to follow up - I decided to try taxr.ai after posting here. Total game changer for my multiple business situation! It correctly identified that I could restructure my quarterly payments to account for business losses in one area offsetting gains in another. Turns out I was overpaying by about $1,200 each quarter! The system even gave me specific guidance on how state taxes work differently between my businesses. Definitely recommend for anyone with complicated tax situations like mine.
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Amina Diallo
If you're struggling to get clear answers about your tax situation, I can totally relate. I spent 4 days trying to reach someone at the IRS about this exact quarterly payment issue. I finally used https://claimyr.com and got through to an actual IRS agent in under 45 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c. The agent clarified that while state income taxes aren't business deductions, there are other state taxes (like certain business licenses or privilege taxes) that ARE deductible on Schedule C. Completely changed my understanding of what I could deduct.
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Oliver Schulz
•Wait, how does this service actually get you through to the IRS? Whenever I call I'm on hold for like 2 hours and then get disconnected. Seems too good to be true.
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Natasha Kuznetsova
•Yeah right. No way this actually works. The IRS is DESIGNED to be impenetrable. This feels like a scam to get desperate business owners to pay for nothing.
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Amina Diallo
•It uses a combination of automation and their callback system. Instead of you sitting on hold, their system navigates the IRS phone tree and holds your place in line. When an agent is about to be available, you get a call connecting you directly. Saved me literally hours of frustration. It's definitely not a scam. I was skeptical too, but it works exactly as advertised. The IRS isn't intentionally difficult to reach - they're just understaffed. This service just handles the waiting part for you so you can go about your day until an agent is ready.
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Natasha Kuznetsova
I need to eat my words from my previous comment. I was SUPER skeptical about Claimyr but I was desperate to get answers about my quarterly payments before the deadline, so I tried it. Not only did I get through to an actual IRS person in about 35 minutes (while I was doing other work), but they walked me through exactly how to handle my specific situation. Turns out I was eligible for first-year business safe harbor I didn't know about. Completely changed my quarterly payment strategy and probably saved me $2000 in unnecessary payments. Still shocked it actually worked.
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AstroAdventurer
Here's something that might help - if your business is making enough profit, you might want to look into the Qualified Business Income deduction (Section 199A). It's not related to your state tax payments, but it could give you a deduction of up to 20% of your business income which might offset some of that pain from your quarterly payments.
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Zainab Omar
•Thanks for mentioning that! I've heard about the QBI deduction but wasn't sure if my photography business would qualify. Do you know if there are income limits or other restrictions I should be aware of?
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AstroAdventurer
•Yes, there are some income thresholds where the deduction begins to phase out - for 2025, it starts phasing out at $191,950 for single filers and $383,900 for married filing jointly. But if you're below those thresholds, you generally can take the full 20% deduction. Photography services are typically considered a "specified service business" which means those income thresholds matter more, but if you're just starting out, you're probably well below them anyway. The deduction applies to your net business income, so after all your legitimate business expenses are deducted.
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Javier Mendoza
Something no one's mentioned yet - make sure you're taking advantage of all your photography business deductions to lower your taxable income in the first place! Equipment, studio space (even home office), software subscriptions, website costs, travel to shoots, professional development courses, etc. The less profit you show, the less you'll owe in quarterly payments.
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Emma Wilson
•And don't forget about vehicle expenses if you drive to photo shoots! You can either take the standard mileage rate or deduct actual expenses (gas, maintenance, insurance, etc.) if you keep good records.
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Giovanni Marino
One thing that helped me when I was starting out - consider making your quarterly payments slightly higher than the minimum required if your cash flow allows it. I know it sounds counterintuitive when money is tight, but hear me out. If your business grows throughout the year (which hopefully it will!), you'll avoid underpayment penalties and won't get hit with a massive tax bill in April. Plus, any overpayment gets refunded or can be applied to next year's taxes. I learned this the hard way when my freelance income doubled mid-year and I suddenly owed way more than expected. The safe harbor rule (paying 100% of last year's tax or 110% if your AGI was over $150k) can be a lifesaver for new businesses with unpredictable income.
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