{"id":21996,"date":"2020-02-14T12:00:34","date_gmt":"2020-02-14T17:00:34","guid":{"rendered":"https:\/\/gtm.com\/household\/?p=21996"},"modified":"2020-02-14T12:02:23","modified_gmt":"2020-02-14T17:02:23","slug":"avoid-estimated-tax-penalties","status":"publish","type":"post","link":"https:\/\/gtm.com\/household\/avoid-estimated-tax-penalties\/","title":{"rendered":"Pay As You Go, So You Won\u2019t Owe: How to Avoid Estimated Tax Penalties"},"content":{"rendered":"
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Waiting until you file your personal tax return to pay your household employer taxes could reduce your expected tax return or, if you wind up owing taxes, subject you to an estimated tax penalty for underpaying your taxes during the year. Here’s how to avoid it.<\/p><\/div>\n

The IRS has a catchy slogan that can potentially save household employers money: pay as you go, so you won\u2019t owe.<\/p>\n

Families that hire nannies, senior caregivers and housekeepers among other types of household workers are considered employers and need to pay federal employment taxes. Specifically, Social Security, Medicare, and unemployment taxes.<\/p>\n

But waiting until you file your personal tax return to pay these taxes could reduce your expected tax return. Or you may wind up owing taxes and possibly be subjected to an estimated tax penalty and interest for underpaying your taxes during the year.<\/p>\n

The overall number of taxpayers who paid an estimated tax penalty jumped from 7.2 million in 2010 to 10 million in 2015, an increase of nearly 40 percent.<\/p>\n

For the 2019 tax year, the penalty for underpayments is six percent of the tax still owed when you file.<\/p>\n

You can avoid owing taxes with your return and the estimated tax penalty if you pay enough tax before you file your return to cover both the employment taxes as a household employer and your income tax.<\/p>\n

In general, you can steer clear of this penalty if you owe less than $1,000 in tax or if you paid at least 90 percent of your tax obligation before you file.<\/p>\n

Fortunately, there are two easy ways to avoid this tax penalty. You can:<\/p>\n