The Basics of Quarterly Tax Payments

The US income tax system is based on a pay-as-you-go model where employees and individuals are required to pay taxes based on their income earned during the year. This is done either by withholding taxes from your paychecks or through estimated tax payments for self-employed individuals.

Estimated tax payments are paid quarterly. By submitting payments based on income and expenses for each quarter of the year, you can be better prepared financially when it comes time to file.

Keep reading to learn more about deadlines for quarterly tax payments and how to make them to stay compliant and minimize any penalties when filing your return.

Who needs to make estimated payments?

The good news is not all taxpayers need to make quarterly estimated tax payments. Those who typically need to make estimated payments include:

• Self-employed individuals
• Freelancers
• Sole proprietors
• S corporation shareholders
• Partners

More specifically, quarterly payments should be made by those who expect to owe $1,000 or more in taxes when their return is filed.

If that applies to you, make sure to add the quarterly tax payment dates to your tax checklist.

When are estimated tax payments due?

For estimated tax purposes, there are four payment periods throughout the year. Quarterly tax deadlines are:

• April 15: For income earned between January 1 – March 31
• June 15: For income earned between April 1 – May 31
• September 15: For income earned between June 1 – August 31
• January 15 (of the following year): For income earned between September 1 – December 31

If the due date falls on a weekend or federal holiday, payment is due the following business day.

How do you pay estimated tax payments?

In order to make quarterly tax payments, you can send Form 1040-ES by mail, pay online, or use your mobile device using the IRS2GO app.

You can also pay your federal estimated tax payments through your IRS account, where you can view your payment history and other important tax records.

Another easy way for individuals running a business to pay taxes is by using the Electronic Federal Tax Payment System (EFTPS) to submit payments electronically. Through the EFTPS, you can make quarterly tax payments weekly, bi-weekly, monthly, or quarterly and schedule payments up to 365 days in advance.

How do you know how much you need to make in estimated payments?

If your income is typically consistent, you can estimate how much you’ll make for the year and send one-fourth of your total quarterly to the IRS at each estimated payment due date. 

It’s a little more tricky if your income varies, as your payment amounts will be unequal throughout the year, but you can estimate your tax bill at the end of each quarter by basing it on how much you have made that quarter and what expenses you may be able to deduct.

What happens if you pay too much or too little?

But what do you do if your estimates are too high or too low for one quarter? In that case, you would either send in a subsequent payment if you underpaid or adjust the next payment if you overpaid.

How do you amend an estimated tax payment?

There’s no way to amend a previously filed and paid quarterly estimated tax payment. There are, however, different ways that you can adjust future payments to reflect changes in your tax liability.

If you underpaid your estimated taxes, you can make a supplemental payment of your estimated taxes after discovery. This will allow you to make up the shortfall in the shortest time possible.

By making the additional tax payment after the fact, you may be back on track as far as your actual tax liability goes.

However, this does not eliminate the possibility that penalties and interest may be incurred if you underpaid your estimated taxes.

If you overpaid your taxes, there’s no way to file an amendment to get a refund, but you could deduct the overpaid amount from the next quarter. The best option is to use QuickBooks Self-Employed to track your expenses and income year-round.

QuickBooks Self-Employed can easily calculate your quarterly estimated taxes based on your information, and you can also e-file your quarterly tax payments.

What if you don’t adjust your estimated tax payment?

If you are not able to adjust your quarterly tax estimates, the good news is that you can sort it all out when you file your annual tax return. If you have an overpayment, you may get a tax refund when you file your taxes. 

If it turns out that you owe more in tax than you have made in estimated payments, you will have to pay the amount due when you file your tax return. However, there is a safe harbor amount for estimated payments where if you pay enough you won’t be penalized.

The safe harbor amount is typically 90% of your actual tax liability or 100% (110% if your 2024 adjusted gross income was more than $150,000) of your previous year’s liability.

Additionally, if you owe less than $1,000, you generally won’t be charged an underpayment penalty.

Also, remember if your income streams are uneven throughout the year, you may be able to use the annualized income method to avoid penalties for quarters when you had lower income and did not pay estimated taxes.

Don’t worry about knowing how to figure out your estimated taxes. With QuickBooks Self-Employed, you can track your business income and expenses and calculate your estimated taxes.  At tax time, your information can easily be exported from QuickBooks Self-Employed to TurboTax Self-employed.