Monday, January 30, 2023
Homepersonal financeDon’t miss this quarterly tax payment deadline

Don’t miss this quarterly tax payment deadline

  • Third-quarter estimated tax payments are due on Sept. 15 for income from self-employment, small businesses, gig economy work, investments and more.
  • Filers with an adjusted gross income below $150,000 may avoid penalties by paying 90% of taxes for 2021 or 100% of 2020 levies.
  • Victims of Hurricane Ida may postpone September’s quarterly payments until Jan. 3, according to the IRS. 

The word "taxes" is seen engraved at the headquarters of the Internal Revenue Service (IRS) in Washington, D.C., U.S., May 10, 2021.Andrew Kelly | Reuters

There's an important deadline approaching for the self-employed, small business owners, gig economy workers, investors and other filers on Sept. 15.

Because income taxes are pay-as-you-go, filers without withholdings must make estimated payments four times every year, and Sept. 15 is the last call for the third quarter.

Someone with an adjusted gross income below $150,000 may avoid penalties by handing over at least 90% of their 2021 taxes or 100% of 2020 levies by each quarterly deadline, including Sept. 15, 2021, and Jan. 18, 2022.

"This, of course, is merely an estimate as the year is still ongoing," said Thomas Scanlon, certified financial planner and certified public accountant at Raymond James in Manchester, Connecticut.

The pandemic negatively affected millions of Americans' livelihoods in 2020, so it's possible paying 100% of last year's taxes won't be enough to cover liability for 2021.

More from Personal Finance:
IRS had a backlog of nearly 8 million paper business tax returns in 2020 due to pandemic
Democrats eye reforms to Trump tax break for businesses
Here are some strategies to pay off that big credit card debt

Those looking for a more accurate number may use the estimated tax worksheet, with detailed instructions in Publication 505. However, it's a multi-step calculation, and some filers may prefer working with a tax professional.

Filers can make quarterly estimated payments by mail, online, by phone or via the IRS2Go mobile app. Scanlon suggests sending it by certified mail a few days early with a return receipt request. "Proof of mailing is important," he said. 

However, if someone can't afford to make quarterly tax payments, they still will owe the balance at tax time. 

"You're going to pay what you owe plus some interest when you file, which is somewhere in the 3% to 4% range right now," said Eric Bronnenkant, a CFP and CPA at Betterment, a digital investment advisor.


Most Popular