How to Determine your Estimated Taxes for 2022

How to determine your estimated taxes

Sole proprietors, partners, and S corporation shareholders, should make estimated tax payments if they expect to owe $1,000 or more when their return is filed. However, many people are uncertain how to go about figuring their estimated taxes for a given year, let alone paying them. Here is a simple guide to determining your estimated taxes for 2022.

Estimating tax using Form 1040-ES

Most individuals use Form 1040-ES to determine their estimated taxes. It is a fairly simple calculation, provided you can provide all of the following:

  • Expected adjusted gross income
  • Deductions
  • Taxable income
  • Taxes
  • Credits

You can use your income, deductions and credits for the prior year as a starting point, referring back to the federal tax return you previously filed.  Form 1040-ES includes a worksheet that you can use to figure your taxes, based on these amounts. You need to estimate the amount of income you expect to receive for the coming year. If your estimated amounts are too high or too low, you can always complete another Form 1040-ES in the following quarter, adjusting the estimates you previously made. It is best to try to make your estimations as accurate as possible, however, in order to avoid penalties.

C-Corporations can follow a similar procedure, except that they use Form 1120-W. 

If you are not comfortable estimating your taxes and completing your Form 1040-ES, or if you run a business and would like to outsource your accounting and tax functions to qualified, certified accountants, contact Georgen Scarborough. We are a firm of CPA’s in Vienna, VA, and we will be happy to handle your estimated tax calculations.

How to Write a Financial Statement For a Non-Profit

How to write a financial statement for a non-profit

A financial statement for a non-profit is much more than just a collection of figures and accounting data. While the financial statement does indeed document a non-profit’s incoming and outgoing cash flows for a certain period, it actually does much more than that. It is, in fact, the key to a non-profit’s ability to conduct business successfully and sustainably. By recording the donations, grants and expenditures of the non-profit, a financial statement enables a non-profit to show its business dealings transparently, attract donors and ensure compliance with the relevant authorities. These statements are usually also required for tax purposes.

What goes into a financial statement?

To get a better understanding of the non-profit financial statement, let’s break it down into its four constituent parts and examine each separately. Each financial statement that is drawn up for a non-profit consists of the following:

  • Statement of Financial Position
  • Statement of Activities
  • Statement of Cash Flows
  • Statement of Functional Expenses

The Statement of Financial Position is a summary of the non-profit’s balance sheet at the end of a specific period—usually a particular financial year. It shows the organization’s assets minus its liabilities, reflected in the equation Assets = Liabilities + Net Assets. A non-profit’s assets are all the items or property that it owns or benefits from. Liabilities are what the organization owes. The net assets consist of the dollar value of the residual assets left over once liabilities are taken into account.

The Statement of Activities (income statement) reflects all the business activities conducted by the organization within the given period: all the incoming transactions versus the various expenses. The difference between these two is the change in net assets (net income) for the given period.

The Statement of Cash Flows records all of the movements of money into and out of the organization, providing explanations for all of the revenue and expenses reflected in the previous statements. A Statement of Cash Flows is divided into operating, investing, and financing activities.

The Statement of Functional Expenses shows expenses of each functional area of the organization, such as programs, fundraising, and management. This is most beneficial to non-profits because it enables them to show potential donors exactly how their money is being spent.

If you run a non-profit, you need accurate and thorough financial statements. It is always best to give this task to experienced certified public accountants. Georgen Scarborough is a firm of CPA’s in Vienna, VA. Contact us for more information.