Hi, I’m Bette Hochberger, CPA, CGMA. On today’s Tax Tip Tuesday, I maybe have some shocking news. Some people still don’t know that their individual tax returns are not due until May 17th. The IRS pushed the filing date because of the many changes to the 2020 tax code. They’re trying to figure out what to do, so they just went ahead, and they pushed out everything to May 17th. Right? And that’s for your 2020, last year’s taxes.

Now, what I’m going to tell you is that your first quarter estimated tax payments are still due on April 15th, which is Thursday. There were groups out there trying to convince the IRS to update and change that deadline to go and be more in line with the new filing deadline. But they said, “No, we’re not going to do that.” Why? Who knows? Anybody’s guess. Suppose anyone remembers the insanity of what was going on with the IRS last year when they moved the tax deadline to July 15. At first, they didn’t move the first-quarter estimate. Then they didn’t move the second. Then they moved them all. It was crazy, but for whatever reason, and I don’t know why really. I don’t. I don’t run the IRS, believe it or not. For whatever reason, they didn’t move your first-quarter estimated payment.

Often, people, especially business owners, are going to rely on the prior-year tax return to figure out what you owe this year? Right? So, there are safe harbors, things like that that you might need to help figure out what those amounts are. If you haven’t completed your taxes yet, because you’re waiting for that May deadline, which is probably not a bad idea given all the changes, then you might be wondering, “Well, how am I supposed to come with this number?” Right? “Where am I making this up from? I don’t know what last year looked like. I still don’t have a handle on this year.” If you’ve watched any of my videos before, you’ve heard me talk about profit first. Now, this is fantastic for my business owners. This is a great way to estimate what your estimated taxes should be for the first quarter.

If you know how much money you received, and this will work if you’re a sole proprietor, you’re a contractor, an S corporation business owner, any of those people who are not necessarily strictly on a W-2, if you can see what your deposits were for the first quarter, from January through March, you can see roughly what your estimated taxes due would be. If you take that amount and multiply it by 15%, it will give you what your estimated tax payments should be. And if you want to be good, roll it up to last week, and you’ll be very well paid in. For my profit first people, hopefully, you’ve already done this. Right? Hopefully, you’ve got that tax account set aside. You’ve got that money put away. I know I do. I’m about to make my estimated payment. I’m not worried about it. It doesn’t matter if I updated my books or not. That money is sitting in my tax account, ready and waiting for me to make my estimated payment.

My point is if you struggle with figuring out how much to pay for your estimated quarterly payments, or your year-to-year income is not the same… Which after last year; is anybody’s income going to look the same in 2021? Probably not. I have clients that went out of business, clients who are doing fantastic, people starting new businesses. You might have no idea, but if you follow this formula, you’ll be pretty darn close. Even if it’s not a hundred percent exact, you’ll be closer than you would be if you don’t pay in anything at all. So, that is my plug for profit first, a great way to cover your butt with your taxes, make sure you’ve got enough paid in, make sure you have that money set aside because you know not everything you make as a business owner is yours. Right? Part of it goes to the IRS, whether we like it or not.

Don’t forget, Thursday the 15th; you still have to pay your quarterly estimated taxes, even though your taxes aren’t due. Yeah, and that’s it. We’re just keeping it crazy here in the Coronapocalypse, one year at a time, I guess, or maybe one quarter at a time. Anyway, if you have any questions, comments, drop them in the comment section below, give us a like, follow, share. Spread the word about your estimated taxes. I’ll see you next time.