Tax Season Organizer

Tax Season Organizer

Framing: This skill produces prep material for a CPA, not tax advice. Say so early

and state every assumption explicitly so the accountant can adjust.

Quick start

Determine which mode the user needs, pull the relevant data, calculate or compile, and deliver a structured document the accountant can work from directly.

User: "what do I owe for estimated taxes this quarter?"
→ Pull YTD P&L from QuickBooks
→ Calculate estimated federal income tax + SE tax
→ Subtract payments already made this year
→ Show Q-specific amount due with due date and assumptions stated
→ Output: "Estimated Q2 payment due June 16: $X — see full breakdown below"

User: "I need to send out 1099s"
→ Pull all contractor/vendor payments from QuickBooks + PayPal + Stripe
→ Identify contractors paid ≥ $600 YTD
→ Flag records missing W-9 / EIN
→ Output: 1099-NEC candidate list + missing W-9 action list

Determine mode

Read the user's message and context to decide which path applies:

• Quarterly estimate — keywords: estimated payment, quarterly taxes, how much to set aside, safe harbor, Q1/Q2/Q3/Q4
• Year-end 1099 prep — keywords: 1099, 1099-NEC, year-end, contractors, W-9, send 1099s, file 1099s
• Combined — some users will ask "year-end summary" and need both. Run quarterly last; run 1099 prep first since it drives the most action items.

If the intent is ambiguous, ask: "Are you looking at your estimated tax payment for this quarter, or are you preparing 1099s for your contractors — or both?"

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Path 1: Quarterly estimated tax

1. Pull YTD financials

Use QuickBooks to pull a Profit & Loss report from January 1 of the current year through the last day of the most recently completed quarter. Capture:

• Gross revenue (total income)
• Total expenses (operating expenses, COGS, etc.)
• Net ordinary income = revenue − expenses

If QuickBooks is not connected, ask the user to upload a P&L as CSV or paste the key numbers. For field names and query approach, see reference/connector-queries.md.

2. Ask about prior estimated payments

Before calculating, ask: "How much have you already paid in estimated taxes so far this year?" If the user doesn't know, note that you'll calculate total liability — they can subtract payments themselves or check with their accountant.

3. Calculate estimated liability

See reference/calculation-assumptions.md for the full math and the assumptions table you must include in output.

Short version: 1. SE tax = net profit × 0.9235 × 0.153 (then halve it — the deductible half offsets income) 2. Adjusted net = net profit − (SE tax / 2) 3. Federal income tax = apply the bracket rate appropriate to the user's business type and estimated annual income (default to 22% unless the user tells you their bracket; note this assumption explicitly) 4. Total annual liability = federal income tax + SE tax 5. Quarterly payment = (total annual liability − payments made) ÷ quarters remaining 6. Safe harbor check — note whether the user should verify against prior-year tax (100% of prior year, or 110% if AGI > $150k)

4. State assumptions and deliver output

Use this output structure:

Structure the output as a document with these sections in order:

1. Header — H2 with "Estimated tax summary" followed by the quarter and year. Subline: prepared date and "For review by your accountant."

2. YTD snapshot — Bold lines showing YTD net profit with date range, estimated annual net profit (annualized from YTD), and assumed business type (sole proprietor, S-corp, etc. — flag as assumed, not confirmed).

3. Self-employment tax — Show the SE tax calculation: net profit times 92.35% times 15.3%, and the deductible SE half.

4. Federal income tax estimate — Adjusted net income, assumed bracket (default 22%, note to confirm with accountant), and the federal estimate.

5. Total estimated annual liability — SE tax plus federal income tax.

6. Quarterly payment — Total liability minus payments already made, divided by quarters remaining, with the specific dollar amount due and the due date.

7. Safe harbor note — Remind the owner to ensure total payments meet 100% of prior-year tax (or 110% if AGI exceeded $150k).

8. Assumptions — Bullet list of every assumption: bracket rate, business structure, state taxes excluded, deductible SE half included, and deductions not applied (home office, QBI, depreciation).

---

Path 2: Year-end 1099 prep

1. Pull contractor payments from all sources

Query each connected source for all payments made to individuals or businesses for services in the tax year. Do not include payments for goods, refunds, or internal transfers.

QuickBooks — try live connector first, fall back to CSV if needed:

1. Try live connector. Attempt to pull vendor-level payment records via the QuickBooks MCP. If the connector returns individual payee records with name, amount, and account category, use them directly and skip the CSV step.

2. Detect aggregate-only response. If the MCP returns only category-level totals (e.g. "Contract labor: $7,500" with no payee breakdown), the connector does not yet support vendor-level queries. In this case, prompt the user:

"QuickBooks returned summary data only — I need payee-level detail to build your 1099 list. Please export a Transaction List by Vendor report (QuickBooks → Reports → Expenses → Transaction List by Vendor, filtered to this tax year) and upload the CSV here. I'll process it automatically."

3. Process CSV via Desktop connector. Map columns: payee name, amount, date, payment method, EIN/SSN status. Follow the same aggregation and threshold logic below regardless of whether data came from the live connector or CSV.

Note for future connector versions: If the QuickBooks MCP is upgraded to expose vendor payment records directly, step 1 will succeed and the CSV fallback will be skipped automatically. No changes to this skill are needed — the try-first logic handles it.

For field names and query approach, see reference/connector-queries.md.

PayPal: Pull all "Goods & Services" payments sent. Note: PayPal issues its own 1099-K to contractors above the threshold — flag these separately in output so the accountant can determine whether a 1099-NEC is also needed.

Stripe: Pull all transfers/payouts made to external parties. Same 1099-K caveat as PayPal applies.

Desktop/CSV: If the user uploads a CSV directly (without going through QuickBooks export), map columns: payee name, amount, date, payment method, EIN/SSN status.

2. Aggregate by payee

Combine across sources and sum payments by individual or business entity. Deduplicate by name (watch for "John Smith" vs "John A. Smith" — flag likely duplicates for human review rather than auto-merging).

3. Apply the $600 threshold

• Flag for 1099-NEC: any payee paid ≥ $600 for services (contractors, freelancers, consultants)
• Flag for 1099-MISC: any payee paid ≥ $600 for rent, attorney fees, prizes/awards
• Near-threshold alert: flag payees paid $400–$599 — close to the threshold, accountant may want to verify

Corporations (Inc., Corp., LLC taxed as C or S corp) generally do not need a 1099-NEC — note this but flag for accountant confirmation.

4. Check W-9 status

For each flagged payee, note whether a W-9 / EIN is on file in QuickBooks. Mark as:

• ✅ W-9 on file (EIN/SSN recorded in QuickBooks)
• ⚠️ Missing — W-9 not on file; must collect before filing
• ❓ Unknown — cannot determine from available data

5. Deliver the 1099 prep package

Use this structure:

Structure the 1099 prep output as a document with these sections:

1. Header — H2 with "1099 prep list" and the tax year. Subline: prepared date, "For review by your accountant," and "Not tax advice."

2. Summary — Bullet counts: total contractors paid, number requiring 1099-NEC (at or above $600 for services), number missing W-9 (with filing deadline note for Jan 31), and number near-threshold flagged for review.

3. 1099-NEC candidates table — Columns: payee name, total paid, data sources, W-9 status (on file / missing / unknown), and notes. Flag any payee paid via PayPal or Stripe with a note that the platform may issue its own 1099-K.

4. Missing W-9 action list — Numbered list of contractors who need to provide a W-9 before filing, with amounts paid and a reminder to request the form.

5. Near-threshold table — Payees paid $400-$599 flagged for accountant review, with a note to verify no additional payments were missed.

6. Payment processor note — Explain that PayPal and Stripe issue their own 1099-K forms and the accountant should confirm whether a 1099-NEC is also needed for contractors paid exclusively through those platforms.

7. Next steps checklist — Action items for the accountant: collect missing W-9s, confirm unknowns, review near-threshold payees, verify corporation exemptions, confirm 1099-K overlap handling, file by January 31.

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Guardrails

• Not tax advice. Open every deliverable with this: "Prepared for review by your accountant — not tax advice." Include it in the document header, not just in chat.
• State every assumption. If you assumed a 22% bracket, say so. If you excluded state taxes, say so. The accountant will adjust; give them the levers.
• Don't merge payees automatically. Flag likely duplicates for human review.
• Don't file anything. The output is prep material. Filing is out of scope.
• Corporation exemption is a judgment call. Note it; don't auto-exclude.

Reference files

• reference/calculation-assumptions.md — full tax math, bracket table, and SE tax walkthrough
• reference/connector-queries.md — how to pull data from QuickBooks, PayPal, and Stripe
• reference/gotchas.md — Good / Bad patterns for common failure modes
• reference/examples/quarterly-estimate.md — worked quarterly estimate example
• reference/examples/year-end-1099.md — worked year-end 1099 prep example

Tax Calculation Assumptions

This file documents the math and assumptions used in quarterly estimated tax calculations. Always surface these assumptions in the output so the accountant can adjust.

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Self-employment (SE) tax

SE tax applies to sole proprietors, single-member LLCs, and partners. It does not apply to S-corp owners on their W-2 wages (only on distributions — and even that varies).

Formula:

SE tax base     = net profit × 92.35%
                  (the 7.65% reduction accounts for the employer-equivalent deduction)
SE tax          = SE tax base × 15.3%
                  (12.4% Social Security + 2.9% Medicare)
                  Note: Social Security only applies up to the wage base ($176,100 for 2025)
Deductible half = SE tax ÷ 2   ← reduces taxable income

Example:

Net profit:      $80,000
SE tax base:     $80,000 × 92.35% = $73,880
SE tax:          $73,880 × 15.3%  = $11,304
Deductible half: $11,304 ÷ 2      = $5,652

---

Federal income tax estimate

Business types and how they're taxed

Default assumption: sole proprietor unless the user specifies otherwise. Always state this.

Federal income tax brackets (2025, single filer)

For a rough estimate, apply a single effective rate. Use 22% as the default for most SMB owners unless the user gives you more info. Note this assumption explicitly.

Adjusted net income (for tax calculation):

Adjusted net = net profit − (SE tax ÷ 2) − QBI deduction (if applicable)

The QBI deduction (up to 20% of qualified business income) is significant for many SMBs — note that it's not included in the base estimate and the accountant should apply it.

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Quarterly due dates (2025)

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Safe harbor rule

To avoid underpayment penalties, total estimated payments must be at least the lesser of:

• 100% of prior year tax liability (or 110% if prior year AGI exceeded $150,000)
• 90% of current year tax liability

Always note this in output. The user's accountant should confirm prior-year tax figures.

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What the estimate does NOT include

Always list these exclusions in every output:

• State and local income taxes
• QBI deduction (Section 199A — can reduce federal tax by up to 20%)
• Home office deduction
• Vehicle deductions
• Depreciation / Section 179
• Retirement contributions (SEP-IRA, Solo 401k) — can significantly reduce SE tax base
• Health insurance deduction for self-employed
• Prior-year net operating loss carryforward

These can meaningfully reduce the final number. Flag them so the accountant applies them.

Connector Query Guide

How to pull the right data from each connector for each mode.

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QuickBooks — Quarterly mode (P&L)

Pull a Profit & Loss report for the period January 1 through the last day of the most recently completed quarter.

Key fields to capture:

• Total Income (gross revenue)
• Total Expenses (all operating expenses)
• Net Ordinary Income (= income − expenses; this is the basis for tax calculation)

If QuickBooks returns multiple income/expense categories, sum them. You want the single bottom-line net profit figure.

If the user's QuickBooks is on cash basis, use that. If accrual, note it in output — the accountant should confirm which basis to use for estimated taxes.

---

QuickBooks — Year-end mode (contractor payments)

Pull all bill payments and checks to vendors for the full tax year (Jan 1 – Dec 31).

Filter for:

• Vendor type = "1099 eligible" (if the user has tagged vendors in QuickBooks)
• OR any vendor whose category is: consulting, contract labor, subcontractor, freelance, design, legal, accounting, marketing, staffing

For each vendor record, capture:

• Vendor name (legal name if available)
• EIN / SSN (from vendor profile — indicates W-9 on file)
• Total payments for the year
• Payment dates and amounts (for cross-reference)
• Vendor type / 1099 eligibility flag

Common issue: Many QuickBooks users do not tag vendors as 1099-eligible. If 1099 eligible returns few or no results, pull ALL vendors with significant payment totals and let the user / accountant classify them. Note this in output.

---

PayPal — Year-end mode

Pull all "Goods & Services" payments sent (not received) for the tax year.

Key fields:

• Recipient name / email
• Total amount per recipient (aggregate for the year)
• Transaction type = "Payment" or "Business Payment"
• Date

Exclude: personal payments ("Friends & Family"), refunds, disputes, transfers to own accounts.

1099-K note: PayPal issues its own 1099-K to any recipient who receives ≥ $600 in goods & services payments. Flag this in output — the accountant determines whether the business must also issue a 1099-NEC or can rely on PayPal's 1099-K.

---

Stripe — Year-end mode

Pull all transfers to external accounts (payouts to contractors, not payouts to the business owner's own bank).

Key fields:

• Recipient name / ID
• Total transferred per recipient for the year
• Payment description / metadata (to confirm these are for services)

Exclude: Stripe payouts to the business's own bank account.

1099-K note: Same as PayPal — Stripe issues 1099-K to contractors above the threshold. Flag and defer to accountant.

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Desktop / CSV fallback

If any connector is unavailable, ask the user to: 1. Export a P&L from QuickBooks as CSV (Reports → Profit & Loss → Export) 2. Export a transaction history from PayPal (Activity → Download → CSV) 3. Export a payout report from Stripe (Dashboard → Payouts → Export)

When reading uploaded CSVs, look for these columns (names vary by export):

• P&L: Description, Amount, Type (Income / Expense)
• PayPal: Name, Type, Amount, Date, Transaction ID
• Stripe: Description, Amount, Created date, Status

If columns don't match, ask the user to identify the payee name and amount columns.

Worked Example: Quarterly Estimated Tax

Scenario: Sarah runs a freelance graphic design business as a sole proprietor. She asks: "How much should I pay in estimated taxes for Q2?"

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Step 1: Pull YTD P&L from QuickBooks

QuickBooks P&L — January 1 through March 31, 2025:

• Gross income: $48,000
• Operating expenses: $12,500 (software, equipment, marketing)
• Net ordinary income: $35,500

---

Step 2: Ask about prior payments

"Have you made any estimated tax payments so far this year?"

Sarah: "I paid $2,000 in April for Q1."

---

Step 3: Calculate

YTD net profit (Q1):        $35,500
Annualized net profit:      $35,500 × 4 = $142,000  ← rough annualization

Self-employment tax:
  SE base:   $142,000 × 92.35%  = $131,137
  SE tax:    $131,137 × 15.3%   = $20,064
  (Soc. Sec. cap at $176,100 — not hit, full rate applies)
  Deductible half:              = $10,032

Federal income tax:
  Adjusted net: $142,000 − $10,032 = $131,968
  Bracket: 22% (estimated; actual may vary with household income)
  Federal tax:  $131,968 × 22%     = $29,033

Total estimated annual liability:
  SE tax + federal = $20,064 + $29,033 = $49,097

Quarterly breakdown:
  Annual liability:       $49,097
  Payments made (Q1):    −$2,000
  Remaining:              $47,097 ÷ 3 remaining quarters = $15,699 per quarter
  Q2 payment due June 16: ~$15,700

---

Step 4: Output delivered to Sarah

## Estimated tax summary — Q2 2025
Prepared April 24, 2025 · For review by your accountant · Not tax advice

**YTD net profit (Jan 1 – Mar 31):** $35,500
**Estimated annual net profit:** $142,000 (annualized from Q1 actual)
**Business type assumed:** Sole proprietor (confirm with accountant)

### Self-employment tax
$142,000 × 92.35% × 15.3% = $20,064
Deductible SE half: $10,032

### Federal income tax estimate
Adjusted net income: $131,968
Assumed bracket: 22% (confirm with accountant — household income affects this)
Federal income tax estimate: $29,033

### Total estimated annual liability
$20,064 + $29,033 = **$49,097**

### Q2 payment
Annual liability:      $49,097
Less Q1 payment made: −$2,000
Remaining:             $47,097 ÷ 3 quarters = **~$15,700 due by June 16, 2025**

### Safe harbor note
To avoid underpayment penalty: ensure total 2025 payments ≥ 100% of your 2024
tax (or 110% if 2024 AGI > $150,000). Ask your accountant for that figure.

### Assumptions — review with your accountant
- Federal bracket: 22% (effective rate may differ)
- Business structure: sole proprietor (assumed)
- Annualization: Q1 × 4 — income may be seasonal
- State taxes: not included
- QBI deduction (up to 20%): not applied — could reduce federal tax significantly
- Retirement contributions, home office, vehicle: not applied

Worked Example: Year-End 1099 Prep

Scenario: Marcus owns a digital marketing agency. He asks: "I need to send out my 1099s — can you pull together a list of who needs one?"

---

Step 1: Pull contractor payments from all sources

QuickBooks (Jan 1 – Dec 31, 2024):

PayPal (goods & services payments sent, 2024):

Stripe (not connected — skipped)

---

Step 2: Aggregate and deduplicate

Cross-referencing QuickBooks and PayPal:

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Step 3: Apply $600 threshold and W-9 check

• Jenna Torres: $9,600 ✅ → 1099-NEC required · W-9 on file (EIN recorded in QB)
• Apex Web Solutions: $15,200 ✅ → 1099-NEC candidate · W-9 on file · Note: may be a corp (confirm)
• Spark Digital Inc.: $6,000 ✅ → 1099-NEC candidate · W-9 on file · "Inc." — likely corp exempt (confirm)
• Design by Mike: $2,100 ✅ → 1099-NEC required · W-9 not on file — must collect
• Bob Nguyen: $1,030 ✅ → 1099-NEC required · W-9 not on file — must collect
• FedEx: $320 → below threshold; goods/shipping — not required

---

Step 4: Output delivered to Marcus

## 1099 prep list — 2024
Prepared January 10, 2025 · For review by your accountant · Not tax advice

### Summary
- Contractors paying: 5 candidates identified
- Require 1099-NEC (≥$600 for services): 5
- Missing W-9: 2 — action required before January 31
- Corporation exemption review needed: 2 (Apex, Spark)
- PayPal overlap: 2 contractors (Jenna Torres, Design by Mike) — see note below

### 1099-NEC candidates

| Payee | Total paid | Source(s) | W-9 status | Notes |
|-------|-----------|-----------|------------|-------|
| Jenna Torres | $9,600 | QB + PayPal | ✅ EIN on file | PayPal also paid $1,200 — confirm 1099-K handling |
| Apex Web Solutions | $15,200 | QuickBooks | ✅ EIN on file | "Solutions" — may be corp; confirm exemption with accountant |
| Spark Digital Inc. | $6,000 | QuickBooks | ✅ EIN on file | "Inc." — likely corp-exempt; confirm with accountant |
| Design by Mike | $2,100 | PayPal only | ⚠️ Missing W-9 | Full name unknown — obtain before filing |
| Bob Nguyen | $1,030 | QB + PayPal | ⚠️ Missing W-9 | Combined QB ($550) + PayPal ($480) = $1,030 |

### Missing W-9 action list
These contractors must provide a W-9 before you can file:

1. **Design by Mike** — paid $2,100 via PayPal. Obtain full legal name and W-9.
   IRS W-9 form: https://www.irs.gov/pub/irs-pdf/fw9.pdf
2. **Bob Nguyen** — paid $1,030 (QB + PayPal). W-9 not on file for either source.

### Payment processor note (PayPal)
Jenna Torres and Design by Mike received payments via PayPal. PayPal issues its own
1099-K to contractors receiving ≥$600 in goods & services payments. Your accountant
should confirm whether you still need to issue a 1099-NEC for these two, or whether
PayPal's 1099-K covers the reporting obligation.

### Next steps for your accountant
- [ ] Collect W-9 from Design by Mike (full legal name needed first)
- [ ] Collect W-9 from Bob Nguyen
- [ ] Confirm corporation exemption for Apex Web Solutions
- [ ] Confirm corporation exemption for Spark Digital Inc.
- [ ] Confirm 1099-K overlap handling for Jenna Torres and Design by Mike (PayPal)
- [ ] File 1099-NECs by January 31, 2025
- [ ] File 1096 transmittal with IRS by January 31, 2025

Good / Bad Patterns

Common failure modes and how to avoid them.

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Calculations

BAD: Apply 22% to gross revenue.

Gross revenue: $120,000
Tax estimate: $120,000 × 22% = $26,400  ← wildly wrong

GOOD: Apply bracket rate to net profit AFTER SE tax deduction.

Gross revenue: $120,000
Expenses:      $45,000
Net profit:    $75,000
SE tax:        $75,000 × 92.35% × 15.3% = $10,628
Deductible ½: $5,314
Adjusted net:  $75,000 − $5,314 = $69,686
Fed. tax est.: $69,686 × 22% = $15,331
Total:         $10,628 + $15,331 = $25,959

---

Assumptions

BAD: State a dollar figure without any context.

"Your Q2 estimated payment is $6,500."

GOOD: State the figure with the assumptions table.

"Based on 22% federal bracket, sole proprietor structure, and no prior-year

safe harbor data: Q2 payment ≈ $6,500. State taxes not included.

QBI deduction not applied. Review with your accountant."

---

1099 threshold

BAD: Only flag vendors with a QuickBooks "1099 eligible" tag. Many QuickBooks users never set this flag. Silently missing contractors is worse than over-flagging.

GOOD: Pull ALL vendors with ≥ $600 in payments, then note which ones are 1099-eligible per QuickBooks and which are flagged by category heuristics. Let the accountant make the final call.

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Payee deduplication

BAD: Auto-merge "Bob Smith" and "Robert Smith Design LLC" because they sound similar. These could be different people or the same person's sole-prop vs. LLC.

GOOD: Flag likely duplicates for human review.

"These look like they may be the same person — confirm before filing:

Bob Smith ($1,200) | Robert Smith Design ($800) — combined would be $2,000"

---

PayPal / Stripe 1099-K overlap

BAD: Instruct the user to file 1099-NECs for all contractors paid via PayPal.

GOOD: Flag the overlap and defer to the accountant.

"Contractors paid via PayPal or Stripe may already receive a 1099-K from those

platforms. Your accountant should confirm whether you also need to issue a

1099-NEC — double-reporting is an issue some accountants handle differently."

---

Corporation exemption

BAD: Automatically exclude "Smith Consulting Inc." from the 1099 list because it has "Inc." in the name.

GOOD: Flag it for the accountant with a note.

"Smith Consulting Inc. — $4,500. Corporations are generally exempt from 1099-NEC

requirements, but confirm with your accountant (S-corps and some professional corps

are exceptions)."

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Tax advice boundary

BAD: "You should use a SEP-IRA to reduce your tax bill."

GOOD: "Your accountant may recommend a SEP-IRA or Solo 401(k) contribution to reduce taxable income — these can significantly change the estimate above."

The skill surfaces options; the accountant advises.

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S-corp owners

BAD: Apply SE tax to an S-corp owner's full income.

GOOD: Note that SE tax applies only to W-2 wages for S-corp shareholders, not to K-1 distributions — and ask the user to confirm their business structure before running calculations. If unsure, default to sole prop math and note the assumption.