What Are the Quarterly Dates for Estimated Taxes?
Manage your tax liability throughout the year with our guide to federal estimated tax payments.
The U.S. tax system operates on a “pay-as-you-go” principle, requiring taxpayers to remit income tax as it is earned. Quarterly tax payments are a fundamental aspect of this system, ensuring that individuals meet their tax obligations throughout the year. This system requires taxpayers to remit income tax as they earn or receive income, rather than waiting until the annual tax filing deadline. For income not subject to employer withholding, such as earnings from self-employment or investments, estimated tax payments are necessary to avoid penalties. These payments help manage tax liability, preventing a large tax bill at year-end.
Why Quarterly Payments Are Necessary
The U.S. tax system operates on a “pay-as-you-go” principle, meaning taxes are paid throughout the year as income is earned. For most employees, this is handled through payroll withholding by their employer. However, individuals with income not subject to withholding must make estimated tax payments. This applies to various income types, including earnings from freelance work, independent contracting, or substantial investment gains.
The Internal Revenue Service (IRS) requires individuals to make estimated tax payments if they expect to owe at least $1,000 in tax for the year. Failure to pay enough tax through withholding or estimated payments throughout the year can result in underpayment penalties. Understanding and adhering to the quarterly payment schedule is important for many taxpayers.
Federal Estimated Tax Deadlines
Federal estimated tax payments are due on specific dates throughout the year.
For income earned January 1 to March 31, the first payment is due April 15.
The second payment covers income earned April 1 to May 31, due June 15.
The third payment period covers income from June 1 to August 31, due September 15.
The fourth payment covers income received September 1 to December 31, due January 15 of the following year.
If any of these due dates fall on a weekend or a legal holiday, the deadline shifts to the next business day.
Methods for Making Quarterly Payments
The IRS provides several options for submitting estimated tax payments.
IRS Direct Pay: This popular electronic method enables direct payments from a checking or savings account without any processing fees. Payments can be scheduled up to 365 days in advance.
Electronic Federal Tax Payment System (EFTPS): This option requires prior enrollment but offers the flexibility to schedule payments up to a year in advance.
Credit Card, Debit Card, or Digital Wallet: Payments can be made through third-party payment processors, though these services typically involve a processing fee.
Mail: Payments can be made by mail using a check or money order along with a payment voucher from Form 1040-ES, Estimated Tax for Individuals. Taxpayers should ensure they use the correct mailing address based on their location.
Who Needs to Pay Quarterly
Many individuals whose income is not subject to standard employer withholding are frequently required to make quarterly estimated tax payments. This includes self-employed individuals, such as freelancers, independent contractors, and small business owners, who do not have taxes automatically deducted from their earnings. Without these regular payments, they would face a substantial tax liability at the end of the year.
Individuals with significant investment income, such as capital gains from stock sales, dividends, or interest earned from various accounts, may also need to pay estimated taxes. Similarly, those receiving rental income from properties or substantial pension and IRA distributions that are not subject to sufficient withholding often fall into this category. The general rule is that if an individual anticipates owing $1,000 or more in federal tax for the year, beyond any withholding, estimated payments are necessary to avoid potential penalties.