Quarterly estimated taxes
These payments are typically required for self-employed individuals, freelancers, independent contractors, and those with other sources of income that don’t have automatic tax withholding.
When are they due?
For most people, quarterly estimated taxes are due on the following dates: April 15 for income earned from January 1 to March 31
June 15 for income earned from April 1 to May 31
September 15 for income earned from June 1 to August 31
January 15 of the following year for income earned from September 1 to December 31
If a due date falls on a weekend or holiday, the due date may be extended to the next business day.
How do you calculate them?
To calculate your quarterly estimated taxes, you need to: Estimate your income for the year. This includes all taxable income, like self-employment income, dividends, rental income, etc.
Determine your tax liability by applying the appropriate tax rates. For self-employed individuals, this means considering both income tax and self-employment tax (Social Security and Medicare).
Apply any deductions or credits you qualify for to reduce your tax liability.
Divide your total estimated tax liability by 4 (for the four quarters).
Form 1040-ES
You’ll use Form 1040-ES to report and pay these estimated taxes. The form provides instructions on calculating the amount of tax you should pay, and it also includes payment vouchers for each quarter.
What happens if you don’t pay enough?
If you don’t pay enough estimated taxes during the year, you may face penalties and interest charges. However, if you owe less than $1,000 in taxes after subtracting your withholding and refundable credits, you likely won’t be penalized.
How to Pay?
You can make your quarterly estimated tax payments online, by mail, or by using the IRS2Go app. Many states have similar systems for state taxes as well.