Because every person's tax situation is different, we cannot provide an estimated tax calculation that is guaranteed to be 100% accurate. Instead, we provide a conservative guidance based on the following:

• We calculate your businesses profit year-to-date.
• We then calculate the self employment tax (which consists of social security and medicare contributions) using the latest IRS rates.
• To the self-employment tax, we add your business income tax. For this, we simply use the marginal tax rate based on the profit to date. For businesses earning higher income, this may result in a higher tax payment than using the average rate, but we figure it's better to be safe than sorry.

One thing to keep in mind is that we can only calculate your taxes based on information entered in Outright.  If you have multiple businesses or perhaps a "day job", Outright will not take this into account.

If you would like additional information or the actual calculations/formulas, feel free visit the IRS website. This link is for the 2011 information which can be found at the bottom of page 6.