Some taxpayers still have to submit payments by April 15 despite a filing extension amid the pandemic.
While the deadline for filing individual taxes was postponed to May 17 to give taxpayers breathing room, the U.S. Treasury Department and the Internal Revenue Service have not pushed back the filing deadline for first-quarter 2021 estimated tax payments.
For individuals who are self-employed, like in-home child care providers, this means the first quarterly tax payment is due Thursday, April 15 .
Here’s what in-home providers and other quarterly taxpayers need to know.
Who pays taxes to the IRS four times a year?
Individuals who don’t have taxes withheld automatically from their paycheck are required to estimate how much they will owe over the course of a year and make incremental payments.
Estimated tax payments may be necessary if an individual expects to owe at least $1,000 when they file their taxes or they owed taxes in the year prior, according to the IRS. Individuals who are self-employed or have more than one job but don’t have taxes withheld at each should also file taxes this way. Those who work in the gig economy — like doing freelance work, driving a car for a rider service, delivering food for an app, or renting out property — are among others who pay taxes quarterly.
When are the quarterly deadlines?
The first payment is April 15, followed by June 15, Sept. 15 and Jan. 15 of the following year (with some leeway if the dates fall on holidays).
“If you don’t pay enough tax by the due date of each payment period, you may be charged a penalty even if you’re due a refund when you file your income tax return at the end of the year,” the IRS says on its website.
How can you estimate your quarterly payments?
Those who file quarterly taxes use the tax Form 1040-ES and their anticipated gross income for the year. Estimated taxable income, taxes, deductions and credits are also used in the calculation, and prior tax returns can be helpful for completing the tax form. The IRS encourages making estimates “as accurate as possible to avoid penalties.”
Those taxpayers with uneven income throughout the year — such as child care providers who have lower attendance amid the pandemic but might see a full program later in the year as the economy rebounds — can make unequal tax payments, according to the IRS. In this case, payments would be “based on when they receive their income, rather than four even payments.”
“Doing so could help them avoid or lower a penalty because their required payment for one or more periods may be higher with this method,” it says.