Estimated Tax Payments: How They Work, When to Pay in 2024-2025

In the U.S., income taxes are collected on an ongoing basis. For many of us, this means that an employer pays federal and state taxes on our behalf by withholding a certain amount from each paycheck. If you earn income as a freelancer or receive certain types of nonwage income, though, you may need to pay what the IRS calls "estimated quarterly taxes."

Estimated tax payments are taxes paid to the IRS throughout the year on earnings that are not subject to federal tax withholding. This can include self-employment or freelancer earnings, or income you've made on the side, such as dividends, realized capital gains, prizes and other nonwage earnings^[0]

You may also have to make estimated tax payments if you are a W-2 employee, but the tax taken out of your paycheck doesn’t fully cover your tax bill^[0]

Certain states may also require you to pay estimated taxes. Check your state tax department's website for details, as state deadlines and rules may differ from those of the federal one.

People who generally may have estimated tax payment obligations are 1099 workers, W-2 workers who are not withholding enough to cover their tax bill, businesses and some investors.

• People who aren't having enough withheld. The IRS says you need to pay estimated quarterly taxes if you expect:

  • You'll owe $1,000 or more in federal income taxes this year, even after accounting for your withholding and refundable credits.

  • Your withholding and refundable credits will cover less than 90% of your tax liability for this year, or 100% of your liability last year, whichever is smaller. The threshold is 110% if your adjusted gross income last year was more than $150,000, or $75,000 for married filing separately^[0]

    Internal Revenue Service. Publication 505: Tax Withholding and Estimated Tax. Accessed Dec 19, 2024.

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• Self-employed people. Independent contractors, freelancers, and people with side gigs who expect to owe $1,000 or more in taxes are prime candidates for estimated quarterly taxes. That’s because no tax is automatically withheld on their income.

• Businesses. Corporations may also need to make estimated income tax payments if they'll owe at least $500 for the tax year.

• Landlords and investors (maybe). People with rental income and investments might need to pay estimated quarterly taxes — even if an employer withholds taxes from their regular paychecks. “Those might not always be calculated into their withholding amount, and then they come up short and end up having to pay an estimated tax penalty and don't even know what estimated taxes are,” says Thomas Mangold, a CPA in Austin, Texas.

According to the IRS, you don’t have to make estimated tax payments if you’re a U.S. citizen or resident alien who owed no taxes for the previous full tax year.

» Learn more: 1099 vs. W-2 taxes

Estimated tax payments should be made as income is earned, with the IRS collecting them quarterly. These dates don’t coincide with regular calendar quarters, though. Instead, they are due in January, April, June and September.

You can also make payments more often if you like, says Bess Kane, a CPA in San Mateo, California.

“I think it's easier to make 12 smaller payments than four larger payments," says Kane. "If you owe $1,200 for the year, I would rather pay $100 a month than $300 four times a year. And if we're talking bigger numbers, it gets pretty extreme.”

» MORE: Learn how FICA taxes work on your paycheck.

The final estimated tax payment for the fourth quarter of 2024 is due Jan. 15, 2025.

In 2025, estimated tax payments are due April 15, June 16 and Sept. 15. The final due date is Jan. 15, 2026, which applies to income earned in the fourth quarter of 2025.

There's more than one way. Which method makes more sense for you depends on how confident you are about your projected annual income and tax bill.

Either way, you'll use IRS Form 1040-ES to show your income estimate and project your tax liability. IRS Publication 505 has all the rules and details, and good tax software will help you fill out the form and do the math.

If it turns out that you overestimated or underestimated your earnings, you can complete another Form 1040-ES and refigure your estimated tax for the next quarter. When you file your annual return, you’ll likely need to attach an extra form — IRS Form 2210 — to explain why you didn’t send equal payments. If you paid too much, you can get a refund or apply the overage as a credit toward future payments.

The calculations can get complicated quickly, so it’s a good idea to consult with a qualified tax preparer if you have questions. Plus, there are special rules for farmers, fishermen and certain household employers.

» MORE: Learn what the self-employment tax is and whether you have to pay it.

There are several ways you can pay your estimated tax payments, including:

• Your online IRS account.

• The IRS2Go app.

• IRS Direct Pay.

• The U.S. Treasury’s Electronic Federal Tax Payment System.

• By debit or credit card (additional fees apply).

• Pay in cash at certain IRS retail partners.

You can also mail your estimated tax payments with IRS Form 1040-ES using a payment voucher, but the IRS highly encourages taxpayers to consider electronic methods of payment.

» MORE: How to pay your taxes: 10 ways to make an IRS payment

Can you pay estimated taxes at any time?

Estimated taxes are due as income is earned, and the IRS sets quarterly deadlines for their collection. You can opt to send four payments per year following the IRS schedule or pay in smaller increments more frequently — just make sure you’re covering your tax liability for each quarter to avoid underpayment penalties.

» Can't afford your tax bill? Learn about IRS payment plans and how to set one up.

What happens if I forget to pay my quarterly taxes?

The IRS will charge penalties if you don’t pay enough tax throughout the year. The IRS can charge you a penalty for late or inadequate payments, even if you're due a refund when you file your tax return. However, it might give you a break on penalties if:

• You were a victim of a casualty, disaster or other unusual circumstance, or

• You’re at least 62, retired or became disabled this year or last year, and your underpayment was due to “reasonable cause” rather than “willful neglect.”

» MORE: How much interest does the IRS charge on late taxes?

How can I make paying estimated taxes easier?

If you're married to someone who has taxes automatically taken out of their paycheck, they may have enough taxes withheld to cover both of you, Kane explains.