Answer

Hello again jach,

If your net profit for the first 9 months of the year was $249,944, then your estimated earnings for the entire year would be $333,252. This is assuming that your profits remain at approximately the same level each month as they have for the first 9 months of the year, which is the only assumption you can make at this time. The only reason you might choose not to make that assumption is if you are in a seasonable business, and you know for certain that your profits in the last quarter will be significantly lower than they were for the first 3 months of the year.

Based on the assumption that your annual profits will be $333,252, your total estimated federal tax for the year would be $113,218. This is based on the following corporate tax rate schedule.

Between $0 to $50,000 - Tax is 15%
Between $50,000 and $75,000 - Tax is $ 7,500 + 25% of amt over $50,000
Between $75,000 and $100,000 - Tax is $13,750 + 34% of amt over $75,000
Between $100,000 and $335,000 - Tax is $22,250 + 39% of amt over $100,000
Between $335,000 and $10,000,000 - Tax is $113,900 + 34% of amt over $335,000

Since your estimated tax for the year is $113,218, normally you would pay 1/4 of that amount to cover your quarterly estimate. However, if you have not yet made any payments yet in 2009, you will now pay 3/4 of that amount due, which would be $84,914. In addition, since payments were not made for the first two quarters, you should include an additional amount equal to 6% of the tax due to cover interest that you will be charged for not making the estimated payments by the due dates. So your total estimated federal payment should be $84,914 plux $5,095 for interest, or a total of $90,009.

Your estimated Gerogia tax liability will be based on the same estimated annual income of $333,252. Georgia's corporate tax rate is a flat 6%, so your estimated tax liability for the year in the state of GA will be $19,995. You should plan to pay 3/4 of that amount, for a total of $14,996. You should also add a 6% interest factor here as well because no payments were made earlier in the year. So your total estimated tax payment to the state of GA should be $15,895.

These tax payments will be booked as a tax expense that will reduce your actual profits, but the deduction will not be taken in to account for tax purposes. In other words, just to use a simple example -- if your company has net profits in the first quarter of $100,000 and you pay $20,000 in taxes, this will reduce your profit on the books to $80,000 for the quarter. However, for the purposes of figuring your future quarterly tax payments, you will still use $100,000 as the taxable amount to be taken in to consideration.

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Thank you jach, and let me know if you have more questions.