We are solidly into the month of June which means the days are long, the weather is warmer (or cold and gloomy for some of us) and... your second estimated tax payment due date is Tuesday! (June 15th)
As a small business owner, dealing with our byzantine tax system is something you have to manage more than just once a year. But don't worry, it's not as overwhelming as it might seem. Since reading about taxes can be a bit of a 🥱 yawn-fest, I've recorded this video to help you think through your second estimated tax payment for 2021.
And just a friendly reminder, none of the information here (or in my video) is advice for you to implement. Rather, it is general educational guidance. Your specific circumstances might require a different approach. If you're uncertain, please reach out to a qualified financial or tax professional. Hit reply and I'll be happy to help, or point you in the right direction. 🧭
As I mention in the above video, to avoid an underpayment penalty, you'll need to make four estimated tax payments that total 100% of your total tax liability for last year (e.g. 2020). (If your AGI is more than $150,000, you'll need to make total estimated tax payments of 110% of last year's total tax liability). Watch the video for more details!
The other way to avoid an underpayment penalty is to make total estimated tax payments which equal 90% of your current year (e.g. 2021) total tax liability. That, of course, requires you to figure out what your tax liability for 2021 is going to be! And that might feel a bit overwhelming. It is a bit complicated, but you can do it!
If you're interested in figuring out how much you'll owe in taxes this year, I highly recommend checking out Linzy Bonham's free workshop on Setting Aside Enough for Taxes. It's a great workshop with an elegant and simple approach. (This is NOT an affiliate link by the way, I simply think this workshop is super helpful and want you to know about it!)
Where do I send my money? 🤔
Once you know how much you need to send the tax authorities, you still need to figure out where to send it! Here's a link to the IRS payment portal. And don't forget you may need to make estimated tax payments to your state (and sometimes even your local) government as well! Here's a page that can help point you in the right direction to find payment portals for the tax authorities in your geography.
And if you'd like to read all about estimated taxes on the IRS website, here's the best page to begin!
Don't forget to tap into your somatic wisdom! 🧘
If thinking about taxes is creating some discomfort, don't forget to check in with your body. My friend Gayle sent out her Somatic Finance newsletter this morning and wow, it was just what I needed to read. She beautifully explains how tuning in to our bodily wisdom can help us, even (or especially) when it comes to money and finance. Who says this money stuff can't be at least a little woo-woo! 🥰
How can I help? 🤔
Click reply and let me know what you need! I read and respond to every email.
I'm always looking for helpful topics to write about on my blog - let me know what's on your mind!
And if you're looking for one-on-one help, I currently have open slots! I work with therapists from across the country and offer three different ways you can work with me - one is sure to fit both your needs and your budget.
Until the week after next! 👋
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