Tax season is stressful for many, but knowing the right deadlines can make all the difference. While most people focus on filing their annual tax return, there’s another essential tax obligation many taxpayers overlook—quarterly estimated tax payments for required annual payments. Missing these can lead to penalties, unnecessary stress, and financial mismanagement.
If you're self-employed, a freelancer, or someone who earns income not subject to withholding (like rental or investment income), this guide is for you. We'll cover the importance of these deadlines, who needs to pay quarterly estimated taxes, and tips to simplify the process and avoid IRS penalties.
What Are Quarterly Estimated Tax Payments?
Quarterly estimated tax payments are prepayments made to the IRS to cover income tax, self-employment tax, and any other relevant taxes throughout the year. Instead of waiting until the annual filing deadline to settle your tax bill, the IRS requires certain taxpayers to "pay as you go." If your income isn’t subject to withholding—like wages from an employer—you’re responsible for making these payments yourself.
Why Required Annual Payments Matter
The IRS uses quarterly payments to ensure that taxes are paid in a timely manner, helping individuals avoid a lump-sum payment once the year ends. Think of it as spreading out your obligations across the year. Missing these deadlines could result in costly penalties, even if you file and pay your full tax bill on time in April.
Who Needs to Make Quarterly Payments?
Not everyone is required to make these payments, but if the following applies to you, quarterly estimated tax payments are likely in your future:
- You Expect to Owe $1,000 or More in taxes when you file your return after taking into account all credits and withholding.
- Your Income Isn’t Subject to Withholding through a traditional employer. This applies to freelancers, small business owners, independent contractors, landlords, and investors.
- You Earn Extra Income from side gigs, partnerships, or self-employment.
If you're not sure whether this applies to you, it’s worth consulting a tax professional who can help assess your situation.
Important Quarterly Tax Deadlines to Know
Mark your calendars! While your annual tax return has a fixed due date (April 15 for individuals), quarterly estimated payments are broken into four distinct deadlines throughout the year:
- April 15 - First payment for the year.
- June 15 - Second payment.
- September 15 - Third payment.
- January 15 of the following year - Final payment covering Q4 of the prior year.
Even though the January 15 deadline is technically in the next year, it reflects your required annual payment obligations for the previous fiscal year.
Pro Tip: If the 15th falls on a weekend or federal holiday, the due date is shifted to the next business day.
How to Calculate Your Quarterly Payments
To avoid falling short or overpaying, the IRS allows taxpayers to calculate their quarterly payments based on their expected income, deductions, and credits for the year.
The General Rule
To avoid penalties, taxpayers must pay the lower of:
- 90% of the tax liability for the current year, or
- 100% of the tax liability from the previous year (110% if your adjusted gross income exceeds $150,000).
This ensures you either hit the required annual payment threshold or come close enough to stay in the IRS's good graces.
Use IRS Form 1040-ES
The IRS offers a helpful worksheet, Form 1040-ES, which you can use to calculate your estimated quarterly payments. It’s designed to walk you step-by-step through forecasting your income and expenses.
Want to Keep It Simple?
If math isn't your forte—or you want to avoid the hassle altogether—many financial tools and services can automatically calculate your quarterly payments for you based on your earnings.
What Happens If You Don’t Pay on Time?
Failing to pay your quarterly estimated taxes (or underpaying) doesn’t just delay the inevitable—it could cost you. Late payments and underpayments often result in penalties from the IRS, which are calculated based on how much you owe and how overdue the payment is.
While these penalties may not be crippling, they’re entirely avoidable with proper planning. Plus, staying ahead on taxes eliminates the stress of a large, unexpected bill when you file your annual return.
Tips for Staying on Top of Your Quarterly Payments
1. Set Calendar Reminders
Add all four deadlines—April 15, June 15, September 15, and January 15—to your calendar so you never miss a due date. Set multiple alerts as the deadline approaches.
2. Automate Payments
Use the IRS’s Direct Pay system or the Electronic Federal Tax Payment System (EFTPS) to schedule payments ahead of time. Automation saves time and ensures you meet deadlines.
3. Adjust Withholding If Possible
If you're employed but earn additional income, consider increasing your tax withholding through your employer. This can eliminate or reduce the need for quarterly payments.
4. Keep Detailed Records
Track your income and deductions throughout the year. This will make calculating payments easier and speed up the preparation of your annual return.
5. Consult a Tax Professional
If you’re unsure about your responsibilities, working with an experienced tax advisor can save you time and money.
Why Staying Current Benefits You
When you stay on top of your quarterly estimated tax payments, you’re not just fulfilling a legal obligation—you’re setting yourself up for long-term financial success. By proactively managing your taxes, you:
- Avoid unnecessary penalties.
- Gain clarity on your business or personal finances.
- Enjoy greater peace of mind during tax season.
It can also have a ripple effect on other areas of financial planning, allowing you to budget more effectively and focus on growing your income without tax stress hanging over your head.
Need Help Managing Your Taxes?
Quarterly tax deadlines are essential, but they don’t have to be overwhelming. At SD Mayer & Associates, we specialize in helping individuals and businesses simplify their tax obligations with customized strategies tailored to your unique circumstances. From calculating your required annual payment to navigating complex tax laws, our team is here to help.
Contact us today to learn more about how we can save you time, reduce costs, and set your finances on the right track. Don’t wait—start planning for your next quarter now!
SECURITIES AND ADVISORY DISCLOSURE:
Securities offered through Valmark Securities, Inc. Member FINRA, SIPC. Fee based planning offered through SDM Advisors, LLC. Third party money management offered through Valmark Advisers, Inc a SEC registered investment advisor. 130 Springside Drive, Suite 300, Akron, Ohio 44333-2431. 1-800-765-5201. SDM Advisors, LLC is a separate entity from Valmark Securities Inc. and Valmark Advisers, Inc. Form CRS Link
DISCLAIMER:
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. The services of an appropriate professional should be sought regarding your individual situation.
HYPOTHETICAL DISCLOSURE:
The examples given are hypothetical and for illustrative purposes only.
