The fourth quarter includes the months of September, October, November and December.
Yes, the tax quarters for estimated taxes are not equal!
Most child care providers do not need to file estimated taxes (IRS Form 1040 ES Estimated Tax for Individuals). This is because their spouse usually has enough withheld in taxes to cover them.
You are most likely need to file estimated taxes if you are single or you have a spouse who is unemployed or self-employed.
If you are not sure if you or your spouse has paid in enough taxes for the months of September, October, November and December you should make a tax payment with this form. You goal is to have paid in at least 90% of the taxes you owe for this quarter to avoid paying a penalty. If you pay in too much you will get a refund.
How do you know how much you will owe in taxes? If you were in business in 2015 use that year as a guide. If 2016 was your first year, use 20% of your gross income (parents fees plus Food Program income) for September, October, November and December as a conservative guess of how much you will owe.
Lastly, check your records to see if you will owe any state income taxes. If so, make a state estimated tax payment by January 17th as well.
The deadline for the first quarter of 2017 estimated taxes is April 17, 2017.
Note: You can make monthly, instead of quarterly, estimated tax payments. Doing so might be easier to budget than paying a larger amount quarterly. It may also be easier to remember to pay monthly. To set up a monthly payment, use the electronic Estimated Federal Tax Payment System (EFTPS). Thanks to Roberta Wright for this tip.
Tom Copeland – www.tomcopelandblog.com
Image credit: https://www.flickr.com/photos/jakerust/
For more information on how to file estimated taxes, see my book Family Child Care Tax Workbook and Organizer.