If you’re self-employed, a freelancer, or earn income without regular tax withholding, quarterly tax payments are likely required. The IRS expects you to pay taxes throughout the year if you anticipate owing $1,000 or more when you file your annual return. This system, known as “pay-as-you-go,” prevents a large tax bill in April and helps avoid penalties.
Understanding Quarterly Taxes
Quarterly taxes cover two primary components:
* Federal Income Tax: Based on your estimated earnings.
* Self-Employment Tax: A combined 15.3% for Social Security (12.4%) and Medicare (2.9%). The Social Security portion applies up to a wage base of $176,100 for 2025.
The U.S. tax system demands that taxes be paid as income is earned, not just at the end of the year. Ignoring this can lead to significant penalties and interest charges.
Calculating Your Quarterly Tax Payments
Here’s a simplified approach:
- Estimate Annual Income: Use your previous tax return as a starting point. Adjust if your income has changed.
- Calculate Self-Employment Tax: Multiply your net self-employment income by 15.3%.
- Estimate Federal Income Tax: Apply your estimated tax bracket to your income. (e.g., 22% bracket).
- Total Estimated Tax: Combine self-employment and income tax amounts.
- Quarterly Payment: Divide the total by four.
For example, if you expect $90,000 in net self-employment income in 2025:
- Self-employment tax: ~$13,770
- Income tax (at 22%): ~$19,800
- Total estimated tax: ~$33,570
- Quarterly payment: ~$8,392
Remember that deductions and credits will lower your actual tax liability.
Key Deadlines for 2025 and 2026
The IRS follows a strict quarterly schedule. If a deadline falls on a weekend or holiday, it’s moved to the next business day.
2025 Deadlines:
- Q1: April 15
- Q2: June 15
- Q3: September 15
- Q4: January 15, 2026
2026 Deadlines:
- Q1: April 15
- Q2: June 15
- Q3: September 15
- Q4: January 15, 2027
How to Make Payments
The IRS offers two primary methods:
- Online: The easiest and safest option. Use IRS Direct Pay or the Electronic Federal Tax Payment System (EFTPS). Both are free and provide immediate confirmation.
- By Mail: Submit Form 1040-ES with a check or money order payable to “United States Treasury.” This method is slower and less secure.
State Estimated Taxes
Don’t forget state income tax if your state has one. Most states follow the same quarterly schedule as the IRS, but forms and rules vary. States like Texas, Florida, and Nevada have no income tax.
Avoiding Penalties: The Safe Harbor Rule
To avoid underpayment penalties, meet one of these conditions:
- Pay at least 90% of your current year’s tax liability.
- Pay 100% of your previous year’s tax liability (110% if your adjusted gross income exceeded $150,000).
Many taxpayers find it simplest to pay 100% of last year’s taxes divided by four each quarter.
Common Mistakes to Avoid
- Forgetting self-employment tax.
- Missing deadlines.
- Ignoring state taxes.
- Failing to adjust payments when income changes.
Final Take
Paying quarterly taxes requires planning, but it’s manageable with the right approach. Accurate estimation, timely payments, and utilizing the safe harbor rule are crucial. Failing to do so can lead to penalties and unnecessary stress. By staying organized and proactive, you can avoid surprises and ensure compliance with IRS regulations.
