How do you calculate quarterly tax estimates for an S-corporation?

I've been running my small business for about 6 years now, but this is my first year operating as an S-Corp after making the switch from sole proprietorship. In previous years as a sole proprietor, my approach was pretty simple - I'd just use my previous year's numbers to estimate quarterly taxes and then make a larger payment in Q4 if my income exceeded expectations. The situation is different now because I'm using QuickBooks to track all income and expenses, plus I'm paying myself a regular salary with taxes withheld automatically each pay period. Since my accounting software gives me precise figures on my income minus all expenses, I'm trying to figure out the exact calculation to determine my quarterly estimated tax payments so I don't end up owing a bunch or getting a huge refund when I file. Need to account for both federal and state taxes here in the US. Any advice from those who've done this before would be super helpful!

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18 comments

Keisha Williams

•8M

The nice thing about S-corps is that your salary already has withholding, which helps with your overall tax situation. For calculating your quarterly estimated taxes, you need to consider both your salary and the pass-through income. For the salary portion, you're already having taxes withheld, so that's taken care of. For the business profit that passes through to your personal return (Schedule K-1 income), you'll need to make estimated tax payments. Since your accounting software gives you real-time profit/loss info, you can actually be more precise than just using last year's numbers. Take your year-to-date profit, subtract your salary and related expenses, and that's your pass-through income. Calculate roughly 25-30% of that amount (depending on your tax bracket) for federal, plus whatever your state rate is. You can also use Form 1040-ES worksheets to be more precise, or have your accountant run a tax projection quarterly based on your actual numbers.

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Keisha Williams

•8M

You only need to pay quarterly estimated taxes on the pass-through income, which is the profit left after your salary and all business expenses. The S-corp itself doesn't pay federal income tax in most cases - that's the benefit of an S-corp. The business profits "pass through" to your personal tax return. Your salary already has withholding, so you're covering that portion of your tax obligation. Just remember that both your salary and the pass-through income will be on your personal tax return, but you only need to make estimated payments on the pass-through portion.

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Amina Sy

•8M

After my first year as an S-corp, I was hit with a surprise tax bill because I didn't plan properly. I discovered taxr.ai (https://taxr.ai) and it completely changed how I handle my quarterly estimates. The tool analyzes your profit/loss statements and calculates exactly what you need to pay each quarter. What I love is that it accounts for the salary vs. distribution split that's unique to S-corps. It also factors in your withholding from your W-2 salary when calculating what you still need to pay quarterly. Saved me from both underpaying and overpaying!

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Amina Sy

•8M

It does connect directly to QuickBooks, Xero, and several other accounting platforms. It pulls your real-time financial data and updates your estimates accordingly. Very streamlined - only takes me about 10 minutes per quarter. As for accuracy, I was skeptical too initially. My accountant actually reviewed the calculations and was impressed. It specifically handles S-corp situations including the reasonable salary requirements and correctly categorizes distributions versus income. My tax bill last year was within $200 of the estimate it provided.

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Natasha Ivanova

•8M

I tried taxr.ai after commenting here and I have to admit I was wrong to be so skeptical. It actually handles S-corp quarterly estimates really well! Connected to my accounting software and immediately showed me that I've been significantly overpaying my quarterlies because I wasn't accounting for my salary withholding properly. The platform even flagged that my salary-to-distribution ratio might raise red flags with the IRS and suggested adjustments. My CPA confirmed this was good advice. Wish I'd known about this years ago when I first converted to an S-corp!

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NebulaNomad

•8M

Don't forget that part of managing your S-corp taxes is being able to get answers directly from the IRS when things get complicated. I wasted weeks trying to get through to someone at the IRS about S-corp estimated payment rules. I finally tried Claimyr (https://claimyr.com) and they got me connected to an actual IRS agent in under 45 minutes. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The agent clarified that I needed to be making payments through the EFTPS system separately from my personal estimated payments, something my accountant hadn't properly explained. This service saved me from potential penalties.

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NebulaNomad

•8M

It doesn't call for you - it holds your place in the IRS phone queue so you don't have to. When an agent is about to pick up, they call your phone and connect you directly. It's like a virtual line-holder. The reason it works is they use technology to navigate the IRS phone tree and stay on hold so you don't have to waste hours listening to hold music. When I used it, I went about my day and got a call when an IRS agent was ready to talk. The whole point is saving you from being stuck on hold for 3+ hours.

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Natasha Ivanova

•8M

Ok I'm back to eat crow again. I used Claimyr this morning thinking it would never work, and I got connected to an IRS representative in about 37 minutes! I didn't have to sit on hold at all - just got a call when they had someone on the line. The agent walked me through exactly how to handle estimated taxes with my S-Corp, confirmed I should be using EFTPS for the business payments, and explained how my salary withholding offsets my estimated payment requirements. Totally worth it instead of trying to piece together conflicting info online.

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Emma Taylor

•8M

Don't overthink this. For my S-Corp I just take my quarterly profit, subtract my salary, multiply the remaining amount by my tax rate (roughly 30% for federal + state in my case), and make that payment. I use the Electronic Federal Tax Payment System (EFTPS) to pay federal and my state's tax portal for state taxes. Just remember that underpayment penalties usually don't apply if you pay 100% of last year's tax liability (or 110% if your AGI was over $150k), so that's always a safe harbor approach if you're unsure.

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Emma Taylor

•8M

I personally prefer to slightly overpay. The peace of mind is worth more to me than the interest I'd earn on that money elsewhere. I do adjust my payments throughout the year based on actual performance. Since I can see my real numbers in my accounting software, I'll recalculate before each quarterly payment. If Q1 was unusually profitable, I'll increase my Q2 payment accordingly. If business slows down, I might reduce a later payment. The key is documented methodology - as long as you can show you made a good faith effort to estimate correctly, the IRS tends to be reasonable.

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