Estimated tax payments are payments you send to the IRS during the year when no taxes are being withheld from your income, like with self-employment or freelance work.
The IRS requires you to pay taxes throughout the year as you earn income, rather than paying everything at tax time. If no taxes are withheld from your income, this usually means you need to make quarterly estimated tax payments.
How are estimated tax payments different from withholding?
Withholding is different because taxes are automatically taken out of your income—for example, from a paycheck.
Estimated tax payments are used when withholding doesn’t happen automatically, and you’re responsible for sending payments yourself.
Do estimated tax payments apply to state taxes too?
Yes. Estimated tax payments and withholding can apply at both the federal and state level.
State rules and payment requirements vary, so you’ll need to contact your state tax agency directly for details about state-specific estimated payments and withholding.
Key takeaway
Estimated tax payments help you stay current on taxes for income that isn’t automatically taxed. Paying on time can help you avoid penalties later.
This content is provided for informational purposes only and should not be construed as tax, legal, financial, accounting, or other advice. Rules and regulations vary by location and are subject to change, so please consult with an expert if you need advice specific to you.
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