The IRS expects estimated tax payments this month even though Tax Day was postponed to May 17.

The IRS extension for filing 2020 income taxes doesn’t apply across the board. While individual taxpayers can postpone both their 2020 filings and tax payments until May 17, those who pay quarterly estimated taxes must pay estimated taxes for the first quarter of 2021 by April 15.

(And FYI, all taxpayers can make 2020 contributions to their individual retirement accounts and HSAs, health savings accounts, until May 17.)

Do you need to pay estimated quarterly taxes?

The April 15 payment deadline applies to anyone whose income isn’t subject to income tax withholding. This may include self-employed folks and sole proprietors, as well as small business partners and S-corporation shareholders and those with income from interest, dividends or rental income.

Underpayment or late payments get penalized

For the newly self-employed or new business owner, it would be easy to overlook 2021 quarterly taxes in the midst of doing 2020 taxes. However, underpayment can be a costly mistake.

According to the IRS, “If you don’t pay enough tax through withholding and estimated tax payments, you may be charged a penalty. You also may be charged a penalty if your estimated tax payments are late, even if you are due a refund when you file your tax return.”

CNBC reports that “people who owe more than $1,000 in tax after subtracting withholding and credits must pay the IRS at least 90% of the tax for the current year or 100% of the tax for the prior year, whichever is smaller.”

2021 Quarterly tax payment deadlines

Mark these 2021 quarterly tax payment deadlines on your calendar to avoid getting late fees and penalties:

• April 15, 2021
• June 15, 2021
• September 14, 2021
• January 15, 2022

For the most up-to-date tax info, visit IRS.gov, including FAQs on estimated taxes. As always, we encourage you to consult with a knowledgeable tax advisor about your individual situation.

Do you have business banking questions? Contact our knowledgeable commercial loan officers online or call 800-991-2221. We’re also available to help in person at your local office.

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