Tax Planning
Quarterly Estimated Taxes: A Simple Guide for the Self-Employed
When you're self-employed, no one withholds taxes for you. The IRS expects you to pay as you go: four times a year. Here's how to stay ahead of it.
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01Why do you have to pay quarterly?
Employees have taxes withheld from every paycheck. When you work for yourself, that job falls to you. The IRS wants its share throughout the year, not just in April.
02The Four Due Dates
Estimated payments are generally due in April, June, September, and January of the following year. Mark them on a calendar; the deadlines don't move to suit your cash flow. The IRS estimated taxes page lists the exact dates each year.
03How to Estimate the Amount
A common approach is to set aside a percentage of every payment you receive (often 25 to 30%) into a separate account. A safer method is the safe-harbor rule below.
04The Safe-Harbor Rule
If you pay at least 100% of last year's tax liability (110% for higher earners), you generally avoid the underpayment penalty even if you owe more at filing. It's the simplest way to stay protected.
05Avoiding the Penalty
Underpaying triggers an interest-based penalty. Paying on time and using safe harbor keeps you clear. A quick mid-year check-in helps you adjust before it's too late.
Common questions
Who has to pay quarterly estimated taxes?
Anyone whose income is not covered by withholding, which usually means the self-employed. Employees have tax taken from each paycheck; when you work for yourself, that job is yours.
When are estimated payments due?
Generally in April, June, September and January of the following year. The dates do not move to suit your cash flow, so put them on the calendar. The IRS publishes the exact dates each year.
What is the safe-harbor rule?
If you pay at least the required percentage of last year's tax liability across the year, you generally avoid the underpayment penalty even if you owe more at filing. It is the simplest way to stay protected when income is hard to forecast.
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Schedule a ConsultationThis article is general information, not individualized tax, legal, or financial advice. Every situation is different. Reach out and we'll look at yours directly.