Estimated taxes aren’t just for freelancers or independent contractors—they apply to anyone earning income that isn’t subject to automatic withholding. That includes:

• Self-employed individuals (including sole proprietors, freelancers, and gig workers)

• Business owners, partners, and S-corporation shareholders

• Landlords earning rental income

• Investors who regularly earn capital gains or dividends

• Retirees with significant untaxed income (like distributions from investments)

As a general rule: If you expect to owe $1,000 or more in federal income taxes after subtracting withholding and refundable credits, the IRS expects you to pay quarterly.

This requirement also applies to corporations that expect to owe $500 or more in tax.

Even if you typically get a refund, a shift in your income—like selling a property, starting a business, or earning a windfall—can trigger the need to pay estimated taxes.

How Quarterly Taxes Work (and Deadlines to Know)

Rather than paying a lump sum in April, the IRS prefers that you pay as you go throughout the year. These quarterly tax payments are due four times a year and are based on income you've earned in that quarter.

Here are the 2025 federal due dates for estimated tax payments:

• Q1 (January 1–March 31): due April 15

• Q2 (April 1–May 31): due June 17

• Q3 (June 1–August 31): due September 16

• Q4 (September 1–December 31): due January 15, 2026

Important: If a due date falls on a weekend or legal holiday, it moves to the next business day.

Even though these payments are made in quarters, the IRS doesn't require the same amount each time. You can base your payments on:

• The "safe harbor rule" (paying 100% of last year’s tax, or 110% if you earned more than $150,000)

• 90% of your current year’s tax liability

• Actual income earned during each quarter

What Happens If You Underpay?

Failing to make quarterly tax payments—or not paying enough—can result in IRS penalties and interest. These penalties apply even if you’re expecting a refund when you file next April.

Here’s how the IRS handles underpayments:

• If you owe more than $1,000 when you file, you may be subject to a penalty.

• The IRS calculates penalties based on how much you underpaid and how long the payment was late.

• State tax agencies may impose their own penalties for underpayment too.

The good news? If your income varies throughout the year (like many entrepreneurs or seasonal workers), you may be able to use the annualized income installment method to reduce or avoid penalties.

Also, if you’ve recently retired or become disabled, or experienced a natural disaster, you may qualify for a waiver of the underpayment penalty.

But for most business owners, freelancers, and investors, proactive planning is the best way to stay penalty-free.

How to Calculate and Pay Estimated Taxes

Start by using the IRS Form 1040-ES to estimate your income and deductions for the year. You’ll use this estimate to calculate your projected tax liability and divide it by four to determine your quarterly payments.

If you have a CPA or enrolled agent, they can help you project your income and adjust quarterly payments based on seasonal trends or changes in income.

To make payments:

• Use the IRS Direct Pay system at irs.gov/payments

• Set up EFTPS (Electronic Federal Tax Payment System) for more control over recurring payments

• Mail Form 1040-ES with a check or money order

• Use IRS2Go mobile app for secure payments on the go

Remember: If you’re also subject to state estimated taxes, you’ll need to calculate and pay those separately according to your state’s rules.

Tools and Resources to Stay Compliant

Paying quarterly taxes doesn’t have to be stressful—especially when you have the right systems in place. Here are some useful tools to stay organized and avoid surprises:

• IRS Tax Withholding Estimator: Helps you calculate how much to pay

• QuickBooks Self-Employed or similar bookkeeping software: Tracks income and expenses in real time

• EFTPS.gov: Manage and schedule payments securely

• Google Calendar or phone reminders: Set alerts for each payment deadline

• Work with a tax advisor: They’ll help you estimate payments and avoid IRS missteps

If your business is growing or your income is becoming less predictable, it's especially important to revisit your estimates each quarter. You may need to adjust based on your latest financials.

Ready to Stay Ahead of the IRS?

Estimated tax payments are one of the most overlooked strategies for avoiding tax debt. They help spread out your liability, prevent penalties, and keep your financials running smoothly.

If you’re unsure whether you should be making estimated payments—or how much you should be sending—we can help. Our tax professionals will walk you through a personalized plan that aligns with your business goals and cash flow.

Let’s set you up for a smarter, stress-free tax year. Schedule a consultation today and take control of your tax strategy before the next deadline hits.