What Are Quarterly Taxes?
In plain English
Quarterly taxes, formally called estimated tax payments, are periodic payments made to the IRS (and often state tax agencies) by individuals who earn income not subject to employer withholding. Self-employed workers, freelancers, landlords, and investors with significant non-wage income typically must pay estimated taxes four times per year.
Who Needs to Pay Quarterly Taxes?
You generally must pay estimated taxes if you expect to owe $1,000 or more in federal tax after subtracting withholding and credits. This commonly applies to self-employed individuals, independent contractors, gig workers, landlords, and retirees with significant investment income. W-2 employees with adequate withholding usually do not need to pay quarterly.
When Are Quarterly Tax Payments Due?
The four deadlines are: April 15 (for Q1: Jan-Mar), June 15 (for Q2: Apr-May), September 15 (for Q3: Jun-Aug), and January 15 of the following year (for Q4: Sep-Dec). Note that the periods are not equal quarters. Missing a deadline triggers an underpayment penalty even if you pay in full when filing your Form 1040.
How Do You Calculate Quarterly Tax Payments?
Use Form 1040-ES to estimate your annual tax liability, then divide by four. Safe harbor rules let you avoid penalties by paying either 100% of last year's tax (110% if AGI exceeds $150,000) or 90% of the current year's tax. Many tax professionals recommend the prior-year safe harbor method for simplicity.
Frequently asked questions
What happens if you miss a quarterly tax payment?
The IRS charges an underpayment penalty calculated as interest on the unpaid amount for each quarter. The penalty applies separately to each missed or underpaid installment. Pay as soon as possible to minimize the interest accruing on the shortfall.
Can you pay quarterly taxes online?
Yes. IRS Direct Pay, EFTPS (Electronic Federal Tax Payment System), and credit/debit card payments are all accepted. Many state tax agencies offer similar online payment portals. EFTPS is free and allows you to schedule payments in advance.
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Related terms
Estimated Taxes
Estimated taxes are quarterly tax payments made to the IRS by individuals whose income is not subject to withholding. They are required for the self-employed, investors, and others who expect to owe at least $1,000 at filing.
Self-Employment Tax
Self-employment tax covers Social Security and Medicare contributions for self-employed individuals who do not have an employer withholding these taxes. The current combined rate is 15.3%.
Withholding
Withholding is the portion of your paycheck your employer sends directly to the IRS and state tax authorities on your behalf throughout the year. It serves as a pay-as-you-go mechanism for income taxes.
Form 1040
Form 1040 is the standard federal income tax return form used by U.S. individuals to report annual income, claim deductions, and calculate their tax liability.
Tax Professional
A tax professional is a qualified expert — CPA, enrolled agent, or tax attorney — who helps individuals and businesses with tax preparation, planning, and compliance.