Estimated Tax Payments: How to Calculate How Much to Pay for Your Estimated Tax Deadline
Last updated 01/15/2025 by
SuperMoney TeamEdited by
Andrew LathamSummary:
Not sure how much to pay for your estimated tax payment? Don’t panic! This article walks you through how to navigate tight deadlines, calculate your payment, and avoid IRS penalties. Gig workers, freelancers, and small business owners—this one’s for you!
Estimated tax payments can be confusing, especially if you’re unsure how much you owe and you’re up against a looming deadline. Missing the mark can lead to penalties, but there’s good news—you have options to avoid trouble with the IRS. Whether you’re a gig worker, freelancer, or small business owner, this guide will help you navigate the process and make informed decisions.
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What are estimated tax payments?
Estimated tax payments are periodic payments made to the IRS or state tax authorities throughout the year. These payments are typically required for individuals or businesses who expect to owe a certain amount of taxes at the end of the year, but do not have enough taxes withheld from their paycheck or other income sources.
The IRS generally expects individuals to pay their taxes on a “pay-as-you-go” basis, meaning that taxes should be paid throughout the year as income is earned. For most employees, this is done through payroll withholding. However, self-employed individuals, freelancers, and others who do not have taxes automatically deducted from their income must make estimated tax payments.
These payments are typically made in four installments throughout the year:
- April 15 (for income earned from January 1 to March 31)
- June 15 (for income earned from April 1 to May 31)
- September 15 (for income earned from June 1 to August 31)
- January 15 of the following year (for income earned from September 1 to December 31)
The purpose of these payments is to avoid penalties and interest for underpayment of taxes. Estimated tax payments are calculated based on your projected income for the year, as well as any applicable deductions and credits.
What to do if you’re unsure how much to pay
1. Make your best estimate
If you’re close to the deadline and still unsure about the exact amount, aim for accuracy using your prior year’s tax return as a starting point. You’ll typically need to pay either:
- 100% of your total tax liability from 2023 (110% if your adjusted gross income exceeded $150,000).
- 90% of your estimated tax liability for 2024.
Plug these numbers into IRS Form 1040-ES to get an idea of what you should pay. While it’s not perfect, this will help you avoid penalties.
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2. Pay what you can now
If you’re truly uncertain about the exact figure, send the IRS a payment anyway—something is better than nothing. The IRS generally calculates penalties based on the unpaid portion of your tax liability, so paying even a partial amount can help minimize potential fees.
3. Consider safe harbor rules
The IRS offers “safe harbor” thresholds to help you avoid penalties. If you’ve already paid enough to meet the safe harbor (100% or 110% of your prior year’s tax liability), you won’t face penalties even if your estimates this year fall short.
Estimated tax payment deadlines
| Quarter | Deadline |
|---|---|
| Q4 2024 (September 1 – December 31) | January 15, 2025 |
| Q1 2025 (January 1 – March 31) | April 15, 2025 |
| Q2 2025 (April 1 – May 31) | June 16, 2025 |
| Q3 2025 (June 1 – August 31) | September 15, 2025 |
| Q4 2025 (September 1 – December 31) | January 15, 2026 |
| Q1 2026 (January 1 – March 31) | April 15, 2026 |
| Q2 2026 (April 1 – May 31) | June 15, 2026 |
| Q3 2026 (June 1 – August 31) | September 15, 2026 |
| Q4 2026 (September 1 – December 31) | January 15, 2027 |
How to pay the IRS your estimated tax payment
Paying your estimated taxes to the IRS is a straightforward process, and there are several options available depending on your preferences. Here’s how you can do it:
1. Online payments
The IRS offers multiple online payment options, which are quick, secure, and convenient:
- Direct Pay: Use the IRS Direct Pay system to pay directly from your bank account without any fees.
- Debit or Credit Card: Payments can be made via a debit or credit card using IRS-approved payment processors. Keep in mind that processing fees may apply.
- IRS Online Account: Log in or create an online account at [IRS.gov](https://www.irs.gov) to make payments, view past payments, and track balances.
2. Electronic Federal Tax Payment System (EFTPS)
The EFTPS is a free service provided by the U.S. Department of the Treasury. It allows individuals and businesses to schedule estimated tax payments in advance. You’ll need to enroll in the system at [EFTPS.gov](https://www.eftps.gov) and link your bank account.
3. By mail
If you prefer traditional methods, you can mail a check or money order made payable to the “United States Treasury.” Include Form 1040-ES payment vouchers to ensure your payment is correctly applied. Mail your payment to the appropriate IRS address based on your state, which is listed in the Form 1040-ES instructions.
4. Through your tax software
If you use tax preparation software, many programs allow you to schedule and pay estimated taxes directly within the platform. Ensure the software you use is IRS-approved.
5. Automatic payroll adjustments
If you have W-2 income in addition to self-employment or freelance income, consider increasing the withholding amount on your W-4 form to cover estimated taxes. This adjustment reduces the need for separate quarterly payments.
6. Mobile app payments
The IRS2Go mobile app allows you to make estimated payments via your smartphone. It also provides resources like tax help and updates on your account status.
Important reminders
– Always ensure you include the correct tax year and type of payment when submitting your estimated taxes. – Keep a record of all payments for your records and for filing your annual tax return. – If you miss a quarterly deadline, pay as soon as possible to minimize penalties and interest.
How to avoid penalties going forward
- Set up a system: Create a schedule to review your income and expenses each quarter. This will make it easier to calculate future estimated payments accurately.
- Adjust your withholding: If you have a part-time W-2 job, increase your withholding to cover your total tax liability and reduce the need for estimated payments. Use the IRS Tax Withholding Estimator to fine-tune your numbers.
- Work with a tax professional: If your income is unpredictable or complex, a CPA or tax advisor can help you calculate more precise payments.
What happens if you underpay?
If you don’t pay enough in estimated taxes or miss a payment altogether, the IRS may charge you an underpayment penalty. However, penalties can sometimes be waived if:
- You failed to pay due to circumstances beyond your control (e.g., a natural disaster).
- You’re a newly self-employed individual and didn’t realize estimated payments were required.
To request a waiver, file Form 2210, Underpayment of Estimated Tax, along with your annual tax return.
Can I pay estimated taxes online?
Yes, the IRS allows individuals to make estimated tax payments online using the Electronic Federal Tax Payment System (EFTPS) or by paying through IRS Direct Pay. Many state tax agencies also offer online payment options for state estimated taxes.
What if I overpay my estimated taxes?
If you overpay your estimated taxes, you can choose to apply the overpayment to future estimated taxes or request a refund when you file your tax return. If you expect a large refund, you may want to adjust your estimated payments for the following year to avoid overpaying again.
Key takeaways
- Estimated taxes apply to gig workers, freelancers, small business owners, and anyone with income not subject to withholding.
- If unsure how much to pay, base your calculations on last year’s tax return or pay 90% of your current year’s tax liability.
- Use safe harbor rules to avoid penalties if your income varies significantly year-to-year.
- Missing deadlines can result in penalties, but paying as much as possible as soon as possible helps reduce them.
- Set up a quarterly payment schedule or adjust W-2 withholding to make future payments easier to manage.
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