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In the U.S., income taxes are collected on an ongoing basis. For many of us, this means that an employer pays federal and state taxes on our behalf by withholding a certain amount from each paycheck.
If you earn income as a freelancer or receive certain types of nonwage income, though, you may need to pay what the IRS calls "estimated quarterly taxes." Here's what those are and how they work.
» Jump below to see the estimated tax payment due dates
What are estimated tax payments?
Estimated tax payments are taxes paid to the IRS throughout the year on earnings that are not subject to federal tax withholding. This can include self-employment or freelancer earnings, or income you've earned on the side such as dividends, realized capital gains, prizes and other nonwage earnings.
You may also have to make estimated tax payments if you are a W-2 employee but the withholding on your earnings doesn’t fully cover your tax liability, meaning what you expect to owe for the tax year. The amount of money withheld on your paycheck largely depends on the information you provided to your employer on your W-4.
Certain states may also require you to pay estimated taxes. Check your state tax department's website for details, as state deadlines and rules may differ from federal ones.
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When are estimated taxes due?
Estimated tax payments should be made as your income is earned, and the IRS sets deadlines for collection on a quarterly basis. These dates don’t coincide with regular calendar quarters, so plan ahead.
You can also make payments more often if you like, says Bess Kane, a CPA in San Mateo, California.
“I think it's easier to make 12 smaller payments than four larger payments," says Kane. "If you owe $1,200 for the year, I would rather pay $100 a month than $300 four times a year. And if we're talking bigger numbers, it gets pretty extreme.”
Estimated tax payments 2024
The final quarterly tax payment for 2023 was due by Jan. 16. Quarterly estimated tax payments for the 2024 tax year are due April 15, June 17, and Sept. 16. The final payment is due January 2025.
If you earned income during this period | Estimated tax payment deadline |
|---|---|
Sept. 1 – Dec. 31, 2023. | Jan. 16, 2024.* |
Jan. 1 – Mar. 31, 2024. | April 15, 2024. |
April 1 – May 31, 2024. | June 17, 2024. |
June 1 – Aug. 31, 2024. | Sept. 16, 2024. |
*Note: If you file your 2023 return by Jan. 31, 2024, and ensure that your entire balance owed is submitted with that return, you do not have to make the Jan. 16 payment. | |
» Submitting an estimated tax payment with your tax extension request? Skip below.
Who should make estimated quarterly tax payments?
According to the IRS, you don’t have to make estimated tax payments if you’re a U.S. citizen or resident alien who owed no taxes for the previous full tax year. And you probably don’t have to pay estimated taxes unless you have untaxed income.
People who generally may have estimated tax payment obligations are 1099 workers, W-2 workers who are not withholding enough to cover their tax bill, businesses, and some investors.
People who aren't having enough withheld. The IRS says you need to pay estimated quarterly taxes if you expect:
You'll owe $1,000 or more in federal income taxes this year, even after accounting for your withholding and refundable credits (such as the earned income tax credit).
Your withholding and refundable credits will cover less than 90% of your tax liability for this year, or 100% of your liability last year, whichever is smaller. The threshold is 110% if your adjusted gross income last year was more than $150,000, or $75,000 for married filing separately.
Self-employed people. Independent contractors, freelancers and people with side gigs who expect to owe $1,000 or more in taxes are prime candidates for estimated quarterly taxes, says Kane. That’s because there’s no tax automatically withheld on their income, she explains.
Businesses. Corporations may also need to make estimated income tax payments if they'll owe at least $500 for the tax year.
Landlords and investors (maybe). People with rental income and investments might need to pay estimated quarterly taxes — even if an employer withholds taxes from their regular paychecks. “Those might not always be calculated into their withholding amount, and then they come up short and end up having to pay an estimated tax penalty and don't even know what estimated taxes are,” says Thomas Mangold, a CPA in Austin, Texas.
» MORE: Learn how FICA taxes work on your paycheck
How to calculate quarterly estimated taxes
There's more than one way. Which method makes more sense for you depends on how confident you are about your projected annual income and tax bill.
Estimate based on prior-year taxes. You can estimate the amount you’ll owe for the year, then send one-fourth of that to the IRS. For instance, if you think you’ll owe $10,000 for 2024, you'd send $2,500 each quarter. This may work best for people whose income is pretty much the same throughout the year, or for people who have a good idea of what their income is going to be.
Annualize. Another method is to estimate your annual tax liability based on what you’ve already earned during the year. This is often better for people whose income varies. Essentially, you estimate your tax bill at the end of each quarter based on a reasonable expectation of your income and deductions so far this year. The IRS has a worksheet to help you do the math.
Either way, you'll use IRS Form 1040-ES to show your income estimate and project your tax liability. IRS Publication 505 has all the rules and details, and good tax software will help you fill out the form and do the math.
» MORE: See our top picks for best tax software
If it turns out that you overestimated or underestimated your earnings, you can complete another Form 1040-ES and refigure your estimated tax for the next quarter. When you file your annual return, you’ll likely need to attach an extra form — IRS Form 2210 — to explain why you didn’t send equal payments. If you paid too much, you can get a refund or apply the overage as a credit to future payments.
The calculations can get complicated quickly, so it’s a good idea to consult with a qualified tax preparer if you have questions. Plus, there are special rules for farmers, fishermen and certain household employers.
» MORE: Learn what the self-employment tax is and whether you have to pay it
How to estimate taxes for an income tax extension
If you're not someone who normally pays estimated quarterly taxes, but your return isn't quite ready for the IRS by tax day, it's a good idea to file for an automatic six-month tax extension by the tax-filing deadline. You'll also want to submit an estimated tax payment along with the extension request. A tax extension only gives you more time to get your paperwork together, not pay, so submitting the estimated tax can save you the headache of incurring an IRS penalty.
You can estimate your taxes owed using the Estimated Tax Worksheet found on IRS Form 1040-ES. You can also consult a tax calculator or tax software, but keep in mind that these methods may render imperfect results.
» MORE: Can't afford your tax bill? Learn about IRS payment plans and how to set one up.
How to pay estimated taxes
There are several ways you can pay your estimated tax payments, including:
Your online IRS account.
The IRS2Go app.
IRS Direct Pay.
The U.S. Treasury’s Electronic Federal Tax Payment System.
By debit or credit (additional fees apply).
Pay in cash at certain IRS retail partners.
You can also mail your estimated tax payments with IRS Form 1040-ES using a payment voucher, but the IRS highly encourages taxpayers to consider electronic methods of payment.
» MORE: How to Pay Your Taxes: 10 Ways to Make an IRS Payment
Frequently asked questions about estimated tax payments
Can you pay estimated taxes at any time?
Estimated taxes are due as income is earned, and the IRS sets quarterly deadlines for their collection. You can opt to send four payments per year following the IRS schedule or pay in smaller increments more frequently — just make sure you’re covering your tax liability for each quarter to avoid underpayment penalties.
What happens if I forget to pay my quarterly taxes?
The IRS will charge penalties if you don’t pay enough tax throughout the year. The IRS can charge you a penalty for late or inadequate payments even if you're due a refund when you file your tax return, but it might give you a break on penalties if:
You were a victim of a casualty, disaster or other unusual circ*mstance, or
You’re at least 62, retired or became disabled this year or last year, and your underpayment was due to “reasonable cause” rather than “willful neglect.”
How can I make paying quarterly taxes easier?
“If you're married and your spouse has a regular job and is having taxes withheld, he or she may have enough taxes withheld to cover the two of you,” Kane explains.
Revisit your partner's Form W-4, which instructs employers how much tax to withhold from each paycheck. You can change your W-4 at any time. If you’re getting a pension or annuity, use Form W-4P.
» MORE: How to fill out and change your W-4
