June 15th is the deadline for family child care providers to file your federal estimated tax payment for the second quarter of 2017.
The second quarter includes the months of April and May. (Yes, the tax quarters for estimated taxes are not equal!)
The third quarter includes the months of June, July and August. The fourth quarter includes the months of September, October, November and December.
To determine your business profit, add up your income for April and May (parent payments, CACFP reimbursements, grants) and subtract your business expenses for these months. You will owe federal income tax plus Social Security tax (15.3%) on your profit.
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 April and May, 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 last year as a guide. If this is your first year, use 20% of your gross income (parents fees plus Food Program income) for April and May as a conservative guess of how much you will owe. See also my article “How to Estimate Your Taxes in Your First Year of Business.”
Lastly, check your records to see if you will owe any state income taxes. If so, make a state estimated tax payment by June 15th as well.
The deadline for the third quarter of estimated taxes is September 15th. The deadline for the fourth quarter is January 15, 2018.
Tom Copeland – www.tomcopelandblog.com
Image credit: https://www.flickr.com/photos/68751915@N05/
See my book Family Child Care Tax Workbook and Organizer for a detailed description of estimated taxes.