Quarterly estimated taxes: a plain guide for the self-employed

Employees never think about this. Tax comes out of every payslip automatically, and the system is designed so they barely notice.

Nobody does that for you. So the IRS asks you to do it yourself, four times a year. That is all estimated taxes are — payroll withholding, operated by hand.

Do you actually have to pay them?

You are expected to make estimated payments if you will owe $1,000 or more in federal tax when you file, after subtracting anything already withheld.

For most people that threshold arrives at roughly $5,000–$6,000 of annual profit, because self-employment tax alone runs about 14% of profit and starts from the very first dollar. There is no standard-deduction shelter against it the way there is for income tax.

Two situations exempt you:

• You had no tax liability at all last year, you were a US citizen or resident for the whole year, and that year covered twelve months.
• You have enough withheld elsewhere. If you or your spouse have a W-2 job, you can simply increase that withholding to cover the freelance income. Submit a new Form W-4 with an extra amount on the “additional withholding” line and you can skip quarterly payments entirely.

That second option is genuinely underused. Withholding is treated as though it were paid evenly across the year no matter when it actually happened — which means a single large withholding in December can retroactively fix an underpayment from March. Estimated payments get no such treatment.

The 2026 due dates

Quarter	Income earned	Payment due
Q1	January 1 – March 31	April 15, 2026
Q2	April 1 – May 31	June 15, 2026
Q3	June 1 – August 31	September 15, 2026
Q4	September 1 – December 31	January 15, 2027

Look at those periods again. They are not quarters. Q2 covers two months, Q3 covers three, Q4 covers four. This trips up everyone the first year, because the obvious assumption — that a payment due in June covers April, May and June — is wrong. It covers April and May only.

If a due date falls on a weekend or a federal holiday, it moves to the next business day.

Working out each payment

There are two legitimate methods, and the right one depends on how predictable your income is.

The simple way: expected annual tax, divided by four

Estimate your total profit for the year, work out the federal tax on it, subtract anything being withheld from a job, and divide by four.

This is what most people do and it works fine if your income is reasonably steady. The calculator below does the whole thing — enter your expected annual profit and it gives you the quarterly figure directly.

The other way: pay what you actually earned

If your income is lumpy — a huge Q2 and a dead Q3, which is normal in freelancing — you are allowed to pay based on what you genuinely earned in each period rather than a flat quarter. This is the annualised income installment method, and you report it on Form 2210, Schedule AI when you file.

It is more paperwork. But it means a quiet quarter costs you a small payment rather than forcing you to fund a large one out of savings, and it prevents a penalty for “underpaying” in a period where you genuinely earned very little.

How to actually send the money

IRS Direct Pay is the simplest: no account, no registration, free from a bank account. Choose “Estimated Tax” and the correct tax year. Do check that year carefully — payments applied to the wrong one are tedious to unpick.

EFTPS requires enrolment by post and takes a week or so to set up, but it lets you schedule payments up to a year in advance. If you know you will forget, scheduling all four in January is the most reliable thing you can do.

By card works but costs roughly 1.8–2% in processing fees, which on a $5,000 payment is around $95 for no benefit whatsoever.

You do not need to file any form alongside the payment. Form 1040-ES exists and includes vouchers, but if you pay electronically the voucher is unnecessary — the payment is recorded against your account automatically.

Do not forget your state, which usually has its own estimated payments, its own portal, and occasionally its own due dates.

What happens if you skip one

You are charged an underpayment penalty, which despite the name is really just interest — calculated on how much you were short and for how long.

It is not catastrophic. A few hundred dollars short for a quarter costs single-digit dollars. But the rate is tied to the federal short-term rate plus three points, and it has been high enough recently that ignoring it on a substantial underpayment is genuinely expensive.

There is no “you skipped a payment” fine. Miss one and the best move is simply to pay as soon as you can, because the interest stops accruing the moment the money arrives. Waiting for the next due date costs you more.

The rule that makes this much easier

You can sidestep the whole prediction problem. Pay either:

• 90% of what you end up owing this year, or
• 100% of your total tax from last year — 110% if your prior-year AGI was over $150,000

…and you are protected from the penalty no matter how the year turns out.

The second one is the useful half. It requires no forecasting at all: take the total tax line from last year’s return, divide by four, pay that. If this year turns out to be enormous, you will owe the difference in April, but you will owe no penalty.

For anyone whose income swings unpredictably, this is almost always the right approach. It is covered properly in the safe harbour guide.

The most common first-year mistake

People forget that their first year of freelancing has no prior-year tax to anchor to, and that self-employment tax exists at all.

They set aside something for income tax, discover in April that there is an additional 14% of profit they had not planned for, and start their second year with a large bill to clear on top of a fresh set of quarterly payments.

If you are in your first year: work out the number now, open the separate savings account, and start paying quarterly even if you are not certain you have crossed the $1,000 threshold. Overpaying costs you a refund. Underpaying costs you a scramble.