Quarterly estimated taxes, worked out for you
The U.S. tax system is pay as you go. If no employer withholds tax from your income, the IRS expects you to pay it four times a year. Jerome tells you exactly how much, and when.
Estimated tax payments are due April 15, June 15, September 15 and January 15. You generally avoid an underpayment penalty if you pay at least 90% of this year's tax or 100% of last year's tax (110% if last year's adjusted gross income was over $150,000) through withholding and estimates.
Who needs to pay estimates
- Self-employed people, contractors and gig workers
- Owners of S-corporations and partnerships, on their K-1 income
- Landlords and house flippers
- Investors with capital gains, dividends or interest
- Retirees whose withholding does not cover their tax
- Anyone who expects to owe $1,000 or more when they file
The due dates
| Payment | Covers income earned | Due |
|---|---|---|
| 1st | January 1 to March 31 | April 15 |
| 2nd | April 1 to May 31 | June 15 |
| 3rd | June 1 to August 31 | September 15 |
| 4th | September 1 to December 31 | January 15 of next year |
Yes, the "quarters" are not equal. That surprises almost everyone.
Lumpy income? There is a method for that
If most of your income arrives late in the year, like a flip that closes in November, the annualized income method can lower or remove the penalty for earlier quarters. Jerome calculates it on Form 2210 so you do not pay a penalty for income you had not earned yet.
Estimates work best as part of year-round tax planning.
Common questions
What is the safe harbor for estimated taxes?
Pay at least 100% of last year's total tax (110% if your prior-year AGI was over $150,000, or $75,000 if married filing separately), or 90% of this year's tax, spread across the four due dates. Do that and you generally will not owe an underpayment penalty.
How do I pay estimated taxes?
Through your IRS online account, IRS Direct Pay or EFTPS. Keep confirmation numbers; Jerome uses them to match your payments at tax time.
I forgot a payment. Should I skip it?
No. Pay as soon as you can. The penalty works like interest, so a late payment costs less than no payment.
It's always tax time. Let's get ahead of it.
Tell me what is going on with your taxes or your business. A short call is usually enough to know the next step.