Quarterly Estimated Tax
Tax payments made four times a year by self-employed individuals and others with income not subject to withholding. Due dates are April 15, June 15, September 15, and January 15.
Quarterly estimated tax payments are how self-employed individuals, freelancers, and people with significant non-wage income (investment income, rental income, etc.) fulfill the IRS pay-as-you-go requirement. Payments are due on April 15, June 15, September 15, and January 15 of the following year.
You generally need to make estimated payments if you expect to owe $1,000 or more in tax after subtracting withholding and credits. To calculate each payment, estimate your expected income, deductions, and credits for the year, then divide the estimated tax due by four. You can use Form 1040-ES or simply pay online at IRS.gov/payments.
Missing or underpaying estimated taxes can trigger penalties. However, the safe harbor rules protect you: if you pay at least 100% of the prior year's tax liability (110% if prior-year AGI was over $150,000) through a combination of withholding and estimated payments, no penalty applies regardless of what you owe on your current return.
How it works
Quarterly estimated tax is how the IRS collects tax from income that has no employer withholding attached to it — self-employment earnings, rental income, investment income, and similar. The system is pay-as-you-go, so instead of settling everything at filing time, you send in four payments across the year, due April 15, June 15, September 15, and January 15 of the following year, each covering roughly a quarter of your annual liability.
You calculate each payment using Form 1040-ES, estimating your income, deductions, and credits for the year and dividing the projected tax by four, then pay online at IRS.gov/payments or by mailing a voucher. The obligation kicks in once you expect to owe $1,000 or more in tax after subtracting withholding and credits — many new freelancers miss this until their first filing season surfaces a large balance due plus a penalty.
The payment periods are not even three-month quarters — the so-called second-quarter payment covers only two months, April and May, and the September payment covers three, June through August, which trips people up when estimating. Safe harbor rules can simplify the math: paying at least 100% of last year's total tax, 110% if prior-year AGI exceeded $150,000, in even installments avoids the underpayment penalty regardless of how this year's income turns out, which is often easier than forecasting current-year income precisely.
Example: estimating four quarterly payments
A freelance consultant expects to owe $16,000 in total tax for the year, factoring in income tax and self-employment tax on projected net profit, with no withholding from any other source.
Dividing $16,000 by four gives a target of $4,000 per payment, due April 15, June 15, September 15, and January 15. Paying on that schedule keeps the consultant current throughout the year instead of facing one large bill at filing time.
Frequently asked questions
Do I have to pay quarterly estimated tax if I have a regular job too?
What happens if I miss a quarterly estimated tax deadline?
Are the quarterly estimated tax periods really three months each?
Related Terms
Self-Employment Tax
The combined Social Security (12.4%) and Medicare (2.9%) tax paid by self-employed individuals — effectively both the employee and employer shares of FICA, totaling 15.3%.
Safe Harbor
IRS rules that protect you from underpayment penalties if you pay at least 100% of the prior year's tax (110% if AGI over $150,000) or 90% of the current year's tax.
Pay-As-You-Go
The US tax system requires taxes to be paid throughout the year as income is earned, either through employer withholding or quarterly estimated tax payments.
Penalty
A charge imposed by the IRS for filing late, paying late, or underpaying estimated taxes. Common penalties include failure-to-file (5% per month) and failure-to-pay (0.5% per month).