Who needs to pay estimated tax
No employer withholds tax from daycare income, so the IRS expects you to pay as you go. Per the IRS Estimated taxes page, sole proprietors generally must make estimated payments if they expect to owe $1,000 or more when they file. Estimated tax covers income tax and self-employment tax.
You don't have to pay estimated tax for the current year if you had no tax liability for the prior full 12-month year and were a U.S. citizen or resident alien all year. If you or a spouse also have a W-2 job, you can instead raise withholding with a new Form W-4.
Self-employment tax is part of it
According to the IRS self-employment tax page, you owe SE tax and file Schedule SE if your net earnings from self-employment are $400 or more. The rate is 15.3%: 12.4% Social Security and 2.9% Medicare. The 2026 Form 1040-ES worksheet applies it to 92.35% of your net profit, and the Social Security part stops at $184,500 of combined wages and self-employment earnings for 2026. You can deduct half of SE tax when figuring adjusted gross income.
Your net profit is Schedule C, line 31, after deductions like your time-space percentage and food costs. That's why good records lower your estimates. See our 2026 deductions checklist and time-space percentage guide.
Due dates
The year is split into four payment periods. The 2026 Form 1040-ES lists these dates for tax year 2026:
- April 15, 2026 · June 15, 2026 · Sept. 15, 2026
- January 15, 2027 for the 4th payment. You can skip it if you file your 2026 return by February 1, 2027 and pay the whole balance with it.
For tax year 2027, the same pattern applies: the 15th of April, June, and September 2027, and the 15th of January 2028. The IRS will confirm the dates in the 2027 Form 1040-ES. If a due date falls on a Saturday, Sunday, or legal holiday, a payment made the next business day is on time. A mailed payment counts on the U.S. postmark date.
State estimated taxes may also apply. Georgia uses Form 500-ES on a similar quarterly schedule. Florida and Texas have no personal income tax.
Safe harbor: 90%, 100%, or 110%
Under the general rule in Form 1040-ES, you can generally avoid the underpayment penalty if your withholding and estimated payments cover the smaller of:
- 90% of the tax on this year's return, or
- 100% of the tax on last year's return (the return must cover all 12 months).
If last year's AGI was more than $150,000 ($75,000 if married filing separately), use 110% instead of 100%. Prior-year safe harbor is popular with newer providers because you know the number already. Just remember you may still owe a balance in April if income grew.
If your income is uneven, for example you opened mid-year, the annualized income installment method in Publication 505 may lower early payments. It uses Form 2210, Schedule AI.
How to figure and pay
- Estimate your year's net profit from your income log and expenses so far.
- Use the Estimated Tax Worksheet and the Self-Employment Tax and Deduction Worksheet in Form 1040-ES.
- Pay through your IRS Online Account, Direct Pay, or EFTPS, or mail a voucher with a check.
- Refigure mid-year if income changes, and keep a record of each payment date and amount.
Keep a payment record
Form 1040-ES includes a Record of Estimated Tax Payments table. Write down each payment's due date, amount, date paid, and confirmation number. When you file, you'll enter the total paid for the year, and an IRS Online Account lets you check the payments the IRS has on file. Keep this record with your other tax papers for the year.
Frequently asked questions
Do home daycare providers have to pay quarterly taxes?
Generally yes, if you expect to owe $1,000 or more when you file. Estimated payments cover both income tax and self-employment tax.
When is the last 2026 estimated tax payment due?
January 15, 2027. You can skip it if you file your 2026 return by February 1, 2027 and pay the full balance with it.
What is the estimated tax safe harbor?
Pay at least the smaller of 90% of this year's tax or 100% of last year's tax. If last year's AGI was over $150,000 ($75,000 married filing separately), use 110% of last year's tax.
What is the self-employment tax rate?
15.3%, made up of 12.4% Social Security and 2.9% Medicare, applied to 92.35% of net self-employment profit. It applies if net earnings are $400 or more.
Plan your quarterly payments with the Tax Workbook
See profit to date each quarter, so your 1040-ES estimates start from real numbers.