When Estimated Tax Payments Are Due to the IRS
The Four Dates You Need to Know
Estimated tax payments to the IRS are due four times a year, on dates set by the federal government. The dates are April 15, June 15, September 15, and January 15 of the following year. These dates do not change year to year, though the IRS may shift them by one or two days if they fall on a weekend or federal holiday.
Each payment covers the income you earned during a three-month period called a quarter. The first quarter runs January through March, the second April through June, the third July through September, and the fourth October through December. You send in one payment per quarter based on how much tax you expect to owe on that quarter's income.
If you miss a payment date, you can still send it in late, but the IRS will charge you a failure-to-pay penalty and interest on the unpaid amount. The longer the delay, the more the penalty and interest grow. Sending a late payment is still better than not sending it at all, because it stops the interest from continuing to compound.
Key Takeaways
- Estimated tax payments are due April 15, June 15, September 15, and January 15, and these dates shift only if they fall on a weekend or holiday.
- Each payment covers one quarter of the year and is based on the income you expect to earn during that three-month period.
- You owe estimated taxes if you are self-employed, a freelancer, a gig worker, or have income the IRS does not automatically withhold from (like rental income or investment gains).
- The IRS charges a penalty and interest if you miss a payment date, but paying late is better than not paying at all.
- You can use Form 1040-ES to calculate how much to pay each quarter, or work with a tax professional to estimate your liability.
Who Has to Make Estimated Payments
You owe estimated taxes if you earn income that does not have tax withheld automatically. The most common situations are self-employment (running your own business or freelancing), gig work (driving for a rideshare company, delivering food, or other contract work), rental income from property you own, and investment income like capital gains or dividends.
If you are an employee and your employer withholds taxes from your paycheck, you do not need to make estimated payments unless you have other income on the side. If you have both W-2 income and self-employment income, you may owe estimated taxes on the self-employment portion only.
The IRS expects you to pay estimated taxes if you think you will owe $1,000 or more when you file your tax return. Some states also require estimated tax payments, and the dates and rules may differ from federal dates, so check your state tax authority's website if you live in a state with income tax.
How to Calculate What You Owe Each Quarter
The IRS provides Form 1040-ES, which walks you through calculating your estimated tax for the year. The form asks you to estimate your total income for the year, subtract deductions you expect to claim, and then calculate the tax on that amount. You then divide that annual tax by four to get your quarterly payment.
The calculation is not always straightforward, especially if your income varies month to month. If you earned $50,000 in January and February but expect to earn nothing in March, your first quarter income is still $50,000 and your first payment reflects that. If your income is uneven, you can adjust your payments each quarter based on what you actually earned, rather than paying the same amount four times.
Many self-employed people and freelancers work with a tax professional or accountant to calculate estimated payments, especially if their income is unpredictable. A professional can also help you understand whether you should make equal quarterly payments or adjust them based on actual earnings each quarter.
How to Send Your Payment to the IRS
You can pay estimated taxes online through the IRS website using IRS Direct Pay, which is free and lets you schedule a payment for any date you choose. You can also use the Electronic Federal Tax Payment System (EFTPS), which requires you to enroll in advance but gives you more control over payment timing and allows you to set up recurring payments.
Credit card and debit card payments are also accepted, though a payment processor will charge you a fee (usually 1.87% to 2.35% of the payment amount). You can mail a check or money order to the IRS, but mail payments take longer to process and are riskier if they get lost.
Whatever method you use, make sure you include your Social Security number or Employer Identification Number (EIN) on the payment so the IRS knows which account to credit. Keep a record of your payment confirmation number or receipt, especially if you pay by mail.
What Happens If You Miss a Payment Date
If you miss a quarterly payment date, the IRS will charge you a underpayment penalty starting the day after the due date. The penalty is calculated as a percentage of the unpaid amount, and the percentage changes each quarter based on the current federal interest rate. The penalty continues to grow until you pay the full amount owed.
You can reduce or eliminate the penalty if you can show the IRS that you had a valid reason for not paying on time, such as a serious illness, natural disaster, or other unforeseeable circumstance. You would need to file Form 2210 with your tax return and explain the reason for the underpayment. The IRS does not always grant penalty relief, but it is worth requesting if your situation qualifies.
If you realize you will miss a payment date, send the payment as soon as you can. The sooner you pay, the less interest and penalty you will owe. You can also adjust your remaining quarterly payments to make up for the shortfall, though this does not erase the penalty on the late payment.
Adjusting Your Payments If Your Income Changes
If your income is higher or lower than you estimated at the start of the year, you can adjust your remaining quarterly payments. If you earned more than expected in the first quarter, you should increase your second, third, and fourth quarter payments to avoid a large tax bill at the end of the year. If you earned less, you can decrease your remaining payments.
You do not have to make equal payments each quarter. Some self-employed people pay very little in the first quarter (when income is slow) and much more in the fourth quarter (when income is highest). As long as your total payments for the year are close to what you will owe, you avoid or reduce the underpayment penalty.
If you realize mid-year that you will owe significantly more or less than you estimated, recalculate using Form 1040-ES and adjust your next payment. This is especially important if you had a major change in income, such as landing a large contract or losing a client.
State Estimated Tax Payments
Most states that have an income tax also require estimated tax payments, and the dates are usually the same as the federal dates (April 15, June 15, September 15, and January 15). However, some states have different rules about who must pay and how much. A few states do not require estimated payments at all, even if you are self-employed.
Check your state tax authority's website to find out whether you owe state estimated taxes and what the payment dates are. If you owe both federal and state estimated taxes, you can often pay both through the same online system, though you will need to submit separate payments to each.
Frequently Asked Questions
What if the due date falls on a weekend or holiday?
The IRS automatically moves the due date to the next business day. For example, if April 15 falls on a Saturday, your payment is due on Monday, April 17. The IRS announces any shifted dates on its website, so check there if a due date falls on a weekend or federal holiday.
Can I pay all four quarters at once instead of four separate times?
Yes. You can pay your entire year's estimated tax in one lump sum on the first due date (April 15) if you want to. However, if you do this and your income turns out to be lower than expected, you will have overpaid and will receive a refund when you file your return. Paying quarterly is usually better because it spreads the cost and lets you adjust if your income changes.
What if I did not know I needed to make estimated payments and missed all four dates?
Pay the full amount you owe as soon as you realize the mistake. The IRS will charge you a penalty and interest for each missed payment, but paying immediately stops the interest from growing further. When you file your tax return, you can request penalty relief by filing Form 2210 and explaining why you did not know you owed estimated taxes.
Do I still owe estimated taxes if I also have a W-2 job?
Only if your non-W-2 income (self-employment, rental income, or investment income) will result in a tax bill of $1,000 or more. If your W-2 employer withholds enough tax to cover both your W-2 income and your side income, you may not need to make estimated payments. A tax professional can help you figure this out.
What if my income is very unpredictable month to month?
You can adjust your quarterly payments based on your actual earnings each quarter instead of dividing your annual estimate by four. This is called the annualized installment method and is explained in Form 1040-ES. It works well for people whose income is seasonal or varies widely, because you pay more in high-earning quarters and less in low-earning quarters.