In this instructional video, Linda Artesani of Artesani Accounting and The Proper Trust explains how attorneys who are partners in law firms should handle estimated tax payments. She outlines why estimated taxes are essential for partners who take distributions, describes the quarterly payment deadlines (April 15, June 15, September 15, and January 15), and walks through the process of estimating income, deductions, and credits to avoid underpayment penalties. Artesani emphasizes the unique challenges partners face due to fluctuating earnings and the importance of working closely with bookkeepers and tax professionals throughout the year—not just at tax season. She debunks the myth that estimated tax payments are only for high‑income earners, stresses detailed record‑keeping and the use of tax software or IRS resources, and warns of the financial strain and interest that can result from missed or inaccurate payments. The video concludes with a call to action for viewers to stay financially compliant and subscribe for future content.
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Hi there, my name is Linda Artesani and I'm with Artesani Accounting and The Proper Trust. This week we're going to talk about how to master the fine art of deciding exactly how much you should be paying for estimated tax payments. It's something that if you are a partner in a law firm and you take distributions, you have to really be faced with making sure that you're financially compliant when it comes to paying your taxes. It's an often overlooked aspect of being a partner in a firm. And I've seen it where sometimes maybe the attorney doesn't even know they have to pay an estimated tax payment, or sometimes they don't realize that there's a way to calculate it. They got their coupon book from their tax professional and they just followed that. And that's based on the prior year's money that they earned in revenue, Profit in the prior year. But as an attorney, your income can fluctuate due to the nature of your work. Sometimes it's up and sometimes it's down. Maybe sometimes you take a distribution when you're flush with cash and sometimes you kind of skip it. It's different than being an employee where you pay taxes right out of your paycheck. Know that there are quarterly payments that are due, and that's going to cover your tax liability during the year. So You pay these per quarter based on the amount of money that the firm has earned, obviously divided by the percentage of partnership if that's— if you're in a multi-partner situation, and you make these payments to avoid large bills, a tax bill at the end of the year on April 15th, or even penalties or interest. So how do you calculate these? Well, the IRS does give you a pretty good form that allows you to copy that, and I'll have a link for this inside the article itself. Goes with this video. But you have to estimate your income. You have to estimate your deductions and your credits so you don't have any big surprises when you do your tax return next year. So what is the quarterly payment schedule? So mark your calendars. The payments are due April 15th, June 15th, September 15th, and January 15th. So it's important to plan ahead so you don't have any financial strain at all. But you don't want to fail to make these payments. So you could make these payments, but if you have income that's like this and you make the same payment over each quarter, you may have enough in the end of the year. But if you didn't pay the right amounts in the right timing, you might still fall short and then end up having penalties because you didn't pay the right amounts during the right time. So it's part of the job of the bookkeeper or the accountant to help you determine what these payments are. And help you figure out what's best and really analyze where you're sitting at the end of each quarter to know how much you've made in that given quarter. And attorneys definitely face a unique challenge when calculating these payments. It's important if your bookkeeping service or firm or accounting firm doesn't calculate them forward, it's really important to consult with your tax professional. They'll help you estimate your income accurately. And I can tell you firsthand that a lot of the people that I work with, they only talk to their tax professional once a year when they're at their most, the most busiest. It's really not the time. You really should have a tax professional in place so that when you work with them, they know what's going on in your life all year. Kind of like we see as the bookkeeping firm, we see that happening and we know more about what's happening in your life. And it's better that you have more time to talk to them and really have the time to discuss what your goals are and perhaps start to navigate some of the ways that you can maybe mitigate some of those taxes. So I have a few myths that I have in the article. I'm just going to really talk about one here, a myth that I've heard from attorneys have told me, and it's a common misconception: estimated tax payments are really only for high-income earners. And I've heard this before and it's really not true. Most of us, if you are in a partnership, you have— and you're taking a full distribution, you're taking out $10,000 out of the law firm, that is now taxable income on your— that goes into your bucket that you have to pay taxes on. So it's really important to keep detailed records, leverage tools like tax software to help you kind of calculate this, use the IRS's website to help you there, seek professional guidance. For a smooth tax season. So have those payments already in place so you're not shocked when it comes time to process your tax return that you owe $40,000, $50,000 and you don't have that money. It's really important to stay compliant, and it's important for you to strive to thrive financially. It's really what you want to be looking for. So financial compliance is the foundation of a successful legal practice. And it's successful legal practice for you on a business side and also on a personal side. So I hope this helps you kind of understand how these taxes are calculated. It's really calculated on what you've drawn out during the time frame that you've drawn it out. So it's really focused on those quarters. And it's important to have somebody that will guide you, that knows this stuff, and that will help you through the process of managing your estimated tax payments. I want to thank you for watching. If you want to learn more, certainly hit the subscribe button, and we'll see you all next month. Bye now.
