Estimated taxes are payments you make throughout the year on income that doesn't have enough tax withheld. You may need to make these payments if you're self-employed, earn freelance income, or have other income that isn't subject to withholding.
What are estimated tax payments?
If taxes aren't automatically taken out of your income, you may need to make estimated tax payments directly to the IRS.
Estimated taxes can apply to income from self-employment, interest, investments, and rental properties.
How is this different from withholding? Withholding is when taxes are automatically taken out of your income, such as your paycheck. With estimated tax payments, you're responsible for making those payments yourself.
When do I have to pay estimated taxes?
According to the IRS, you’re generally required to make estimated tax payments if both of the following are true:
You expect to owe $1,000 or more in federal tax for the year after subtracting withholding and credits, and
That tax isn’t being fully paid through withholding from your income
If you receive a W-2 and have enough taxes withheld from your paycheck, you may not need to make estimated payments.
If your withholding is too low, you can make estimated tax payments or update Form W-4 with your employer to increase withholding.
Do I have to pay estimated taxes if I'm self-employed?
Generally, yes, if you expect to owe enough tax to meet the IRS payment requirements.
When you're self-employed, taxes usually aren't withheld from your earnings. This means you're responsible for paying income tax and self-employment tax throughout the year.
You can use IRS Form 1040-ES to estimate how much you may need to pay.
When are estimated tax payments due?
Estimated tax payments are generally due four times a year:
April 15
June 15
September 15
January 15 of the following year
If a due date falls on a weekend or legal holiday, the deadline may move to the next business day.
How do I make estimated tax payments?
You can make federal estimated tax payments directly to the IRS:
Do estimated tax payments apply to state taxes?
Yes. Depending on where you live and earn income, you may also need to make estimated state tax payments.
Federal and state estimated taxes are paid separately. Paying the IRS doesn't cover any estimated taxes you may owe to your state.
Requirements and deadlines vary by state. Contact your state tax agency for details.
What happens if I don't pay enough estimated taxes?
You may owe an underpayment penalty if you don't pay enough tax throughout the year, even if you pay your remaining balance when you file.
The IRS has rules, called safe harbor rules, that can help you avoid underpayment penalties.
When don’t I have to pay estimated taxes?
You generally don’t have to pay estimated taxes for the current year if all of the following are true:
You had no tax liability for the prior year
You were a U.S. citizen for the entire year
Your prior-year tax return covered a full 12-month period
You may also be able to avoid estimated payments if you have enough tax withheld from other income.
Can penalties for underpayment be waived?
In some cases, the IRS may waive or reduce estimated tax underpayment penalties if:
You couldn't make payments because of a disaster or unusual circumstance outside your control, and it would be unfair to impose a penalty.
You retired after age 62 or became disabled during the tax year or the previous year, and had a reasonable cause for not making the required payments.
For more information, including how to request a waiver, see the IRS instructions for Form 2210.
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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