What estimated tax payments are and who needs to make them
Estimated tax payments are quarterly payments you send to the IRS when you don't have taxes withheld from your paycheck. If you're self-employed, a freelancer, a gig worker, or you have significant income from investments, rental property, or other sources outside a regular job, the IRS expects you to pay taxes four times a year instead of once at tax time.
You need to make estimated payments if you expect to owe $1,000 or more in federal income tax after accounting for any tax credits. The threshold is lower if you're married filing separately — $500 instead of $1,000. If you don't make these payments and you owe that amount or more, you'll face a penalty when you file your return, even if you pay the full amount owed.
The IRS uses estimated tax to collect money throughout the year from people who don't have an employer taking taxes out of their paychecks. Without it, you'd owe a large lump sum in April with no way to spread the cost across the year.
Key Takeaways
- Estimated tax payments are due four times a year on specific dates: April 15, June 15, September 15, and January 15 of the following year.
- You calculate what you owe using Form 1040-ES, which walks you through your expected income, deductions, and tax liability for the year.
- You can pay online through IRS Direct Pay or the Electronic Federal Tax Payment System (EFTPS), by phone, by mail, or through a tax professional.
- If you underpay or miss a payment, you'll owe a penalty on top of the unpaid taxes, even if you pay everything by April 15 the following year.
- You can adjust your payments if your income changes during the year — you don't have to pay the same amount all four quarters.
The four payment due dates each year
The IRS sets four fixed dates when estimated tax payments are due. These dates don't change year to year, though the IRS may move them slightly if they fall on a weekend or holiday.
| Quarter | Income Earned | Payment Due Date |
|---|---|---|
| First quarter | January 1 – March 31 | April 15 |
| Second quarter | April 1 – May 31 | June 15 |
| Third quarter | June 1 – August 31 | September 15 |
| Fourth quarter | September 1 – December 31 | January 15 (next year) |
If any of these dates falls on a Saturday, Sunday, or federal holiday, the IRS moves the deadline to the next business day. For example, if April 15 is a Saturday, you have until Monday, April 17 to pay. Check the IRS website or your tax software each year to confirm the exact dates, since holiday schedules vary.
How to calculate what you owe using Form 1040-ES
Form 1040-ES is the worksheet the IRS provides to help you figure out your estimated tax payment. It comes with instructions and worksheets that walk you through your expected income, deductions, credits, and tax rate. You don't file this form with the IRS — it's just a calculation tool you keep for your records.
Start by estimating your total income for the year from all sources: self-employment, rental income, investment income, or any other money you expect to receive. Then subtract deductions you plan to claim — business expenses if you're self-employed, mortgage interest, charitable donations, or the standard deduction if you don't itemize. The result is your taxable income. Multiply that by your tax rate (which depends on your filing status and income level) to get your total estimated tax for the year. Divide by four to find your quarterly payment amount.
If you had a tax refund last year or owed money, you can factor that into your calculation. The form also has a worksheet for the self-employment tax you'll owe if you're self-employed — this is Social Security and Medicare tax on top of income tax. Many people use tax software or work with a tax professional to do this calculation, since the worksheets can be complex if you have multiple income sources or significant deductions.
Payment methods: online, by phone, by mail, or through a professional
The IRS offers several ways to send your estimated tax payment. The fastest and most secure method is online through IRS Direct Pay, which is free and lets you schedule payments in advance. You go to irs.gov, enter your payment amount and due date, and authorize a debit from your bank account. You get a confirmation number immediately.
The Electronic Federal Tax Payment System (EFTPS) is another online option that works similarly. You enroll once, then use it to make all your quarterly payments. Both methods let you schedule a payment up to 120 days in advance, so you can set up all four quarters at once if you want.
You can also pay by phone by calling the IRS at 1-800-555-4477 (for individuals) or 1-800-829-4933 (for businesses). Payment by phone uses an automated system and charges a small fee, usually $2.50 to $3.50 per transaction. If you prefer to mail a check, include Form 1040-ES with your payment and send it to the address listed in the form instructions for your state. Mail payments take longer to process and offer no confirmation until the IRS posts it to your account, which can take several weeks.
If you work with a tax professional or accountant, they can often submit your estimated tax payments on your behalf. Some charge a small fee for this service, but it removes the burden of remembering the dates and calculating the amounts yourself.
What happens if you underpay or miss a payment
If you don't pay enough in estimated taxes throughout the year, or if you miss a payment entirely, the IRS will charge you a penalty when you file your return. The penalty is calculated based on how much you underpaid and for how long. Even if you pay the full amount owed by April 15 the following year, you still owe the penalty — it doesn't go away just because you eventually paid.
The penalty amount varies depending on the current interest rate set by the IRS, which changes quarterly. For 2024, the rate is relatively low, but it can be higher in other years. The IRS publishes the current rate on its website. If you underpaid by a small amount — say, $50 or less — the penalty may be minimal, but it still applies.
You can avoid the penalty if you pay enough in estimated taxes to meet one of the IRS's "safe harbor" rules. Generally, you're safe if you pay 90% of your current year's tax liability or 100% of your prior year's tax liability (110% if your prior year income was over $150,000). This means if you're unsure about your income for the year, you can base your payments on last year's taxes and avoid a penalty, even if you end up owing more.
Adjusting your payments if your income changes
You don't have to pay the same amount every quarter. If your income drops partway through the year, or if you realize you'll earn more than you expected, you can recalculate your estimated tax and adjust your remaining payments. This is especially useful for freelancers and gig workers whose income varies month to month.
To adjust, recalculate your expected income for the full year using Form 1040-ES, then figure out how much you've already paid in the first, second, or third quarter. Subtract that from your new total estimated tax, then divide the remainder by the number of quarters left in the year. That's your new quarterly payment amount going forward.
For example, if you paid $2,000 per quarter for the first two quarters but then realize your income will be lower than expected, you can recalculate and pay $1,500 for the third and fourth quarters instead. This keeps you from overpaying and having to wait for a refund after you file your return.
Frequently Asked Questions
Do I have to make estimated tax payments if I have a job and also do freelance work?
Only if your freelance income and other non-job income will result in owing $1,000 or more in federal tax after accounting for what your employer withholds. If your employer withholds enough to cover your total tax liability for the year, you may not need to make estimated payments. Use Form 1040-ES to calculate whether you'll owe $1,000 or more.
What if I can't pay the full amount by the due date?
Pay whatever you can by the deadline to reduce the penalty. The penalty is based on the amount you underpaid and how long you underpaid it, so paying something is better than paying nothing. You can also contact the IRS about a payment plan if you owe a large amount.
Can I deduct estimated tax payments from my income?
No. Estimated tax payments are not deductible. However, if you overpay during the year, you'll get a refund when you file your return, or you can apply the overpayment to next year's estimated taxes.
What if I'm retired and living on investment income?
If your investment income (dividends, capital gains, interest) will result in owing $1,000 or more in federal tax, you need to make estimated payments. Use Form 1040-ES to calculate based on your expected investment income for the year.
Can I make estimated tax payments to my state as well?
Yes. Most states that have an income tax also require estimated tax payments on the same schedule as federal payments. Check your state's tax agency website for the specific form and payment methods, as they vary by state.