When Are 2021 Estimated Tax Payments Due?
If you're self-employed or don't have taxes withheld from other sources of taxable income, it's up to you to periodically pay the IRS by making estimated tax payments.
Our tax system operates on a "pay-as-you-go" basis, which means the IRS wants its cut of your income when you earn it. For employees, the government gets paid through tax withholding each time you get a paycheck (the amount withheld is based on your Form W-4). Retirees can have taxes withheld from Social Security payments and retirement plan distributions, or even have taxes taken out of a required minimum distribution. However, if you're self-employed or don't have taxes withheld from other sources of taxable income (such as interest, dividends, or capital gains), it's up to you to periodically pay the IRS by making estimated tax payments.
For the 2021 tax year, you can pay all your estimated tax by April 15, 2021, or in four equal amounts by the dates shown in the table below.
Due Dates for 2021 Estimated Tax Payments
|Payment||When Income Earned in 2021||Due Date|
|1st Payment||January 1 to March 31||April 15, 2021|
|2nd Payment||April 1 to May 31||June 15, 2021|
|3rd Payment||June 1 to August 31||September 15, 2021|
|4th Payment||September 1 to December 31||January 18, 2022|
You don't have to make the payment due January 18, 2022, if you file your 2021 tax return by January 31, 2022, and pay the entire balance due with your return.
(Note: Even though this year's income tax return filing deadline was moved from April 15 to May 17, the due date for the first quarter estimated tax payment was not pushed back.)
Calculating Your Estimated Tax Payments
Use Form 1040-ES to calculate your estimated tax payments. Start by figuring your expected adjusted gross income, taxable income, taxes, deductions, and credits for the year – there's a worksheet to help you out in the instructions for Form 1040-ES. You can also look at your previous year's tax return for a general guide. What you ultimately want is an estimate of the income you expect to earn for the year.
If your estimate is too high, just complete another Form 1040-ES worksheet to recalculate your estimated tax for the next payment. Likewise, if your estimate is too low, go to the Form 1040-ES worksheet again to readjust your next estimated tax payment. You should also recalculate if your own personal situation changes or if there are tax law changes that can affect your tax liability for the year.
No Income Until Later in the Year?
You don't have to make estimated tax payments until you have income on which you will owe tax. So, for example, if you don't have any taxable income until July 2021, you don't have to make an estimated tax payment until September 15, 2021. At that point, you can either pay your entire estimated tax by September 15, or you can pay it in two installments by September 15 and January 18.
Farmers and Fishermen
If at least two-thirds of your gross income is from farming or fishing, you can make just one estimated tax payment for the 2021 tax year by January 18, 2022. If you file your 2021 tax return by March 1, 2022, and pay all the tax you owe at that time, you don't need to make any estimated tax payments.
How to Pay
Use Form 1040-ES to pay your estimated taxes. There are a number of ways to pay estimated taxes, including by check, cash, money order, credit card and debit card. There are many online payment options, too, such as the Electronic Federal Tax Payment System (EFTPS). The various payment methods are described in the instructions for Form 1040-ES.
Whether you make estimated tax payments or rely on withholding, you could be hit with a penalty if you don't pay enough tax throughout the year. The penalty doesn't apply if you owe less than $1,000 in tax. You can also avoid the penalty if your 2021 withholding or estimated tax payments equal at least 90% of your 2021 tax liability, or 100% of the tax shown on your 2020 return (110% if your 2020 adjusted gross income was more than $150,000).
Don't Forget About Your State
Finally, unless you live in a state with no income tax, you probably owe estimated tax payments to your state, too. Due dates for state payments may or may not coincide with the federal dates, so be sure to check with the appropriate tax agency in your state.