When Are My Estimated Tax Payments Due in 2021?
Did you know income tax is a pay-as-you-go system for both individuals and businesses? In fact, if you are a small business owner or have other types of taxable income such as capital gain, you may need to file quarterly estimated tax payments in order to avoid an IRS penalty.
Read on to find out who should make estimated tax payments and when the estimated tax payments are due in 2021:
Who Should Pay Estimated Tax Payments?
If you have business income from self-employment (such as a sole proprietorship or as a contractor), a partnership or S-corporation, you generally have to make estimated tax payments if you expect to owe tax of $1,000 or more when you file your return.
You also need to make estimated tax payments and file Form 1040-ES: Estimated Tax for Individuals if the total amount of your withholding and refundable credits will be less than the smaller of:
- 90% of your current year’s tax liability
- 100% of your previous year’s tax liability (110% if your previous years’ AGI was $150,000 or more; $75,000 for married taxpayers filing separate returns) or 100% of the previous year’s liability.
You may also need to pay estimated taxes if you have income from investments, rentals, retirement plans, or any other type of taxable income not adequately covered by wage or voluntary withholding.
When Should You Pay Estimated Tax Payments?
If you meet the requirements for paying estimated tax every quarter, write down the following dates, as payments for tax year 2021 are due every quarter on these dates:
|PAYMENT PERIOD||DUE DATE|
|September 1, 2019 to December 31, 2019||January 15, 2021|
|January 1, 2021 to March 31, 2021||April 15, 2021|
|April 1, 2021 to May 31, 2021||June 15, 2021|
|June 1, 2021 to August 31, 2021||September 15, 2021|
|September 1, 2021 to December 31, 2021||January 15, 2022|
(NOTE: The due dates are generally April 15, June 15, September 15, and January 15 but if they fall on a weekend or holiday, the due dates are moved to the next available work day.)
How Do You Pay Quarterly Taxes?
You have a few options for paying your quarterly taxes. They are as follows:
- When you submit your annual tax return, apply the refund to your estimated taxes for the next year.
- Mail a check or money order with Form 1040-ES each quarter.
- Visit IRS.gov to use the Electronic Federal Tax Payment System. Here you can make payments weekly, quarterly, or monthly, and you can set up payments up to a year in advance.
- Enlist the help of a tax advisor. At a Block Advisors location near you, schedule a meeting so the advisor can review your situation, and they can navigate your quarterly or yearly tax obligations based on your unique situation. Once a plan is created, the tax advisor can file on your behalf.
What Happens if You Don’t Pay Quarterly Tax Payments But Should?
If you did not pay enough tax throughout the year, you may incur a penalty for the underpayment. The penalty is a complicated formula; it is imposed on the amount of underpayment for the number of days it remains unpaid, starting with the first quarter’s payment. Refer to Publication 505, Tax Withholding and Estimated Tax for additional insight.
Where Can You Turn For Help?
Do you have additional questions about tax deadlines for small businesses? Rely on our team of small business certified tax pros to get your taxes right and keep your business on track. Connect with us at blockadvisors.com.
Our small business tax professional certification is awarded by Block Advisors, a part of H&R Block, based upon successful completion of proprietary training. Our Block Advisors small business services are available at participating Block Advisors and H&R Block offices nationwide.