Quarterly Estimated Taxes: What They Are and How to Stay on Track
If you’re self-employed or run a small business, there’s a good chance you’re responsible for paying quarterly estimated taxes. But what exactly are they, and how can you make sure you’re paying the right amount (without overpaying or getting hit with penalties)?
Here’s your quick guide to understanding estimated taxes and staying on top of them.
What Are Quarterly Estimated Taxes?
The IRS requires many business owners, freelancers, and independent contractors to pay taxes throughout the year — not just at tax time. These are called estimated tax payments, and they cover:
Income tax
Self-employment tax
Other taxes like alternative minimum tax or investment income taxes
✅ Payments are generally due:
April 15
June 15
September 15
January 15 of the following year
(If the date falls on a weekend or holiday, it moves to the next business day.)
Who Needs to Pay Estimated Taxes?
You likely need to make these payments if you:
Expect to owe $1,000 or more when you file your return
Earn self-employment income (not W-2 wages with withholding)
Own an LLC, S Corp, partnership, or sole proprietorship where taxes aren’t withheld
How to Calculate Your Estimated Payments:
Use your prior year’s tax liability as a starting point (safe harbor rule).
Adjust for this year’s expected income and expenses.
Consider working with a tax professional to make sure your calculations are accurate.
The IRS provides Form 1040-ES to help with calculations, but many business owners prefer software tools or a tax pro to make sure they’re on track.
Penalties for Missing Payments:
If you don’t make the required payments (or underpay), the IRS may charge interest and penalties — even if you end up getting a refund when you file your return.
Wrapping It Up
Quarterly estimated taxes can feel confusing, but they don’t have to be. Staying organized and setting aside money regularly helps you avoid stress, penalties, and big surprises at tax time.
Not sure how much you should be paying? Wrap Up Bookkeeping can help you stay on track with estimated taxes and avoid those painful penalties. Contact us today to get started!
