Quarterly Estimated Taxes: What You Need to Know
A comprehensive guide to calculating and paying quarterly estimated taxes as a self-employed professional.
The US tax system is "pay-as-you-go." If you're an employee, your employer withholds taxes. If you're self-employed, you are the employer, and you must withhold your own taxes and pay them quarterly to the IRS.
Who Needs to Pay?
Generally, if you expect to owe $1,000 or more in taxes when you file your return, you must make estimated payments.
When Are They Due?
- Q1 (Jan-Mar): April 15
- Q2 (Apr-May): June 15
- Q3 (Jun-Aug): September 15
- Q4 (Sep-Dec): January 15 (of the following year)
How to Calculate Payments
You can use the IRS Form 1040-ES worksheet, or simply take 25-30% of your net profit each quarter. A safer harbor is to pay 100% of the tax shown on your prior year's return (110% if AGI > $150k).
Penalties
If you underpay, the IRS charges an underpayment penalty. It's better to overpay slightly and get a refund than to underpay and owe fees.
TaxWatch calculates your estimated quarterly payments in real-time based on your actual income and expenses, so you always know exactly what to send.