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Self-Employed? 2021 Quarterly Tax Dates

If you are self-employed, a freelancer, contractor or entrepreneur...congratulations on being your own boss! Working for yourself looks a lot different than working for someone else, and it is important to keep in mind how your filing status is affected.

Unlike many employees who pay their taxes all at once on Tax Day (April 15), Quarterly Taxes are estimated tax payments to the IRS made throughout the year. These payments are based on an estimation of your income for the current tax year.

self employed girl doing taxes

How to Know if you are Self-Employed

If your income is from a business or service, for example, working as an independent contractor, a social media influencer, freelance writing, driving for Uber, gardening, etc.; that type of income is self-employment income. Your self-employment income is reported on Schedule C or Schedule C-EZ, Profit or Loss from Business. However, you will be able to reduce the income you make by being able to claim business expenses, such as supplies, auto mileage, and cost of goods sold.

Traditional W-2 employees usually do not owe quarterly taxes because they are withheld from their pay. If taxes are not withheld from your pay (attention self-employers), you are responsible for paying the taxes on your own.

GETATAXLAWYER.COM can help advise you on industry-specific business deductions you may not know you are eligible for, saving you money on your taxes.

Who is Subject to Estimated Quarterly Taxes?

If you are self-employed, you most likely do not have taxes withheld from your pay throughout the year. Instead, you are expected to submit your estimated quarterly taxes if you anticipate owing $1,000 or more for your taxes.

If you make a late payment or skip a payment entirely, you may be subject to a late penalty. If your income is unsteady and fluctuates throughout the year, you may be able to use an annualized installment method during tax time to avoid a tax penalty.

When are Estimated Taxes Due?

The 2021 Quarterly Estimated tax deadlines are:

  • 2021 1st Quarter (January 1 – March 31): April 15, 2021
  • 2021 2nd Quarter (April 1 – May 31): June 15, 2021
  • 2021 3rd Quarter (June 1 – August 31): September 15, 2021
  • 2021 4th Quarter (September 1 – December 31): January 18, 2022

If the 15th falls on a weekend or a holiday, the due date is the next weekday. Don’t forget that the final fourth-quarter payment deadline for your 2021 taxes is January 18, 2022.

Some Tips to Avoid Self-Employment Tax Penalties

If your income varies from month-to-month, it's difficult to determine the exact amount of taxes to pay. Here are some tips to help you stay on track and stay on time with your filing.

  1. Get Advice (especially during your first year): During the first year of self-employment, talk to a friend who's self-employed or hire an accountant to handle your tax calculations for you. Either way, you can figure out how much to pay, determine what expenses you can deduct, and get comfortable with the process.
  2. Use Separate Bank Accounts for Business Expenses: It will simplify your life and make it easier to estimate your quarterly taxes if you open a separate bank account and a credit card account reserved for business expenses only. These provide records of your business expenses for easy reference come tax time. It's much simpler than wading through a pile of paper receipts when you're doing your taxes, and it's much easier to check back through if a question about expenses comes up.
  3. Use the IRS 1040-ES Worksheet to Get an Estimate: If your income varies widely from year to year, the best way to estimate your quarterly payments is to use the 1040-ES worksheet from the IRS. The worksheet guides you through calculating your expected tax liability and takes into account certain common deductions you may qualify to claim.
  4. Overestimate, even just a little: Tax penalties can be pricey, depending on how much you underestimated your taxes due. Interest is charged on the amount you underpay from the day your quarterly payment is due until the day it's paid. The underpayment penalty rate is the federal short-term rate plus 3% and is announced quarterly. So, if you underpay for the first quarter of a tax year, you could owe a different penalty amount than if you underpay for the third quarter. If you're unsure of the exact amount to pay each quarter, slightly overestimate your taxes. You won't lose any money in the long-term. You'll just get it back as a tax refund.
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