FREQUENTLY ASKED QUESTIONS ABOUT: Quarterly Estimated Taxes
Who is required to pay quarterly estimated taxes?
Anyone whose income isn’t subject to sufficient withholding may need to pay quarterly. This includes:
- Self-employed individuals and 1099 contractors: no employer withholds on their behalf.
- S-Corp shareholders: when their W-2 salary doesn’t withhold enough to cover total tax liability.
- Retirees: pension, Social Security, IRA withdrawals, and capital gains are often not automatically withheld.
- W-2 employees with significant outside income: rental income, investments, or a side business.
How are quarterly payments calculated?
The IRS provides two Safe Harbor methods:
- 100/110% of Last Year’s Tax Liability: Pay at least 100% of what you owed last year (110% if AGI exceeded $150,000). This is the simplest and most commonly used approach.
- 90% of This Year’s Projected Liability: Estimate your current-year tax bill and pay at least 90%. Useful if income has dropped, but requires more ongoing projection.
When are payments due?
- April 15th: January 1st – March 31st
- June 16th: April 1st – May 31st
- September 15th: June 1st – August 31st
- January 15th (following year): September 1st – December 31st
What happens if I miss or underpay?
The IRS may assess an underpayment penalty based on the amount owed and how long it went unpaid — even if you pay in full at filing. Staying current throughout the year is the best way to avoid this.
What is the benefit of paying quarterly?
Quarterly payments keep you IRS-compliant and help avoid penalties. They also spread your tax obligation across the year, preventing a large lump-sum payment at filing — especially valuable for those with variable or seasonal income.
How do I make a quarterly payment?
- IRS Direct Pay: free and online at irs.gov, no account needed.
- EFTPS: best for recurring payments; requires enrollment.
- Check or money order: mailed with Form 1040-ES.