A Simple Guide to Quarterly Estimated Taxes
When you work for an employer, taxes are withheld from every paycheck automatically. But when you're self-employed or have significant income outside of a W-2 job, you're responsible for paying taxes yourself — on a quarterly basis.
Who Needs to Pay Quarterly Taxes? Generally, you need to make quarterly estimated payments if you expect to owe at least $1,000 in federal taxes for the year and your withholding won't cover at least 90% of your current year tax liability (or 100% of last year's tax liability).
When Are Quarterly Taxes Due? The four payment deadlines are: April 15 (Q1), June 15 (Q2), September 15 (Q3), and January 15 of the following year (Q4).
How Much Should You Pay? The safest approach is the 'safe harbor' method: pay 100% of last year's tax liability (or 110% if your AGI exceeded $150,000) in four equal installments. This protects you from underpayment penalties even if you end up owing more.
How to Pay — You can pay online at IRS.gov using IRS Direct Pay, EFTPS (Electronic Federal Tax Payment System), or by mailing a check with Form 1040-ES.
Educational Disclaimer: This article is for general educational purposes only and does not constitute individualized tax, legal, or accounting advice. Tax laws change frequently. Consult a licensed CPA or tax professional for advice specific to your situation.