• Skip to primary navigation
  • Skip to main content
Good Financial Cents®
Content is based on in-depth research & analysis. Opinions are our own. We may earn a commission when you click or make a purchase from links on our site. Learn more.
  • Make Money
    • Get Money Now
      • Ultimate Guide to Making Money
      • Need Money Now
      • Get Free Money Fast
      • Make Money Fast
      • Make $1K Per Month
    • Control Your Destiny
      • Self Employed Jobs
      • Make Money from Home
      • Hobbies That Make Money
      • How to Become a Freelance Writer
      • Small Business Ideas to Start
      • How to Become an Independent Contractor
      • Best Online Jobs
    • Passive Income
      • Passive Income Ideas
      • Multiple Streams of Income
      • Extra Income
      • Residual Income Ideas
      • Learn to Sell e-Books
      • Make Money on Facebook
      • Make Money on Tiktok
      • Best Online Survey Sites to Make Money
    • Explore More
      • Make Money for Teens
      • Best Online Colleges
      • Best Jobs No College Degree
      • Become a Millionaire
      • Careers for the Future
  • Manage Money
    • Best Of
      • Budgeting Tools
      • Personal Finance Software
      • Best Cashback Cards
    • Company Reviews
      • Personal Capital vs Mint
      • Personal Capital Review
      • SmartAsset Review
    • Guides
      • Buy or Lease a Car
      • What is Liquid Net Worth?
      • Setting Financial Goals
      • How to Budget
      • Ways to Save Money
    • Explore More
      • How Much Car Can I Afford?
      • Best Auto Refinance Companies
  • Invest
    • Best Of
      • Best Short and Long-Term Investments
      • Best Low Risk Investments
      • Best Online Stock Brokers
      • Best Crypto Exchanges
      • Best Short Term Investments
      • Best Long Term Investments
      • Best Trading Platforms
      • Best Investment Apps
    • Company Reviews
      • Lending Club
      • Robinhood
      • M1 Finance
      • Ally
      • TD Ameritrade
      • Fundrise
      • Betterment
      • Etrade
      • Wealthfront
    • Guides
      • Investing for Beginners
      • Investing Small Amounts of Money
      • Investing in Real Estate
      • No Money Down Real Estate
      • Bonds vs Stocks
      • Peer to Peer Lending
      • Best Hedges Against Inflation
      • Safe Bitcoin Investing in 2022
    • Explore More
      • Bitcoin vs. Real Estate
      • Betterment vs Wealthfront
      • Investing for College Students
      • Stock Market Alternatives
    • By Investment Amount
      • How to Invest $100
      • How to Invest $1K
      • How to Invest $5K
      • How to Invest $10K
      • How to Invest $20K
      • How to Invest $50K
      • How to Invest $100K
      • How to Invest $200K
      • How to Invest $500K
      • How to Invest $1M
  • Taxes
    • Best Of
      • Best Tax Relief Companies
      • Best Tax Software
    • Guides
      • Federal Income Tax Guide 2022
      • Taxes and Cryptocurrency
      • How to Do Your Own Taxes
      • How to Invest Your Tax Refund
      • Hiring a Professional Tax Preparer
      • Tax Tips for Freelancers
    • Company Reviews
      • TurboTax Review
      • H&R Block Review
      • Taxslayer
      • Tax Act
  • Insurance
    • Best Of
      • Best Life Insurance
      • Best Home Insurance
      • Best Auto Insurance
      • Cheap Term Life Insurance
      • Car Insurance For Young Adults
    • Guides
      • Term vs Whole Life
      • Different Types of Car Insurance
      • Average Cost of Car Insurance
    • Explore More
      • Life Insurance Over 50
      • Life Insurance Over 80
      • $1 Million Life Insurance
      • $2 Million Life Insurance
      • $3 Million Life Insurance
    • Company Reviews
      • Banner Life Insurance
      • Ladder Life Insurance
      • Health IQ
      • Haven Life
      • Policygenius
      • State Farm Auto Insurance Review
  • Retirement
    • Roth IRA
      • Best Places to Open a Roth IRA
      • Best Investments for Roth IRA
      • 7 Roth IRA Secrets
      • Roth IRA Conversion Guide
      • Roth IRA Rules
      • Roth IRA vs Roth 401k
      • Are Roth IRA Contributions Tax Deductible?
    • 401(k)
      • 401(k) Limits
      • 401(k) to Roth Rollover
      • Is 401(k) Enough for Retirement?
      • Maxed Out 401(k): What's next?
    • Traditional IRA
      • Traditional IRA Rules and Limits
      • Traditional IRA vs. 401(k)
      • Simple IRA Rules
      • SEP IRA Rules
      • How Much Do You Need to Start an IRA?
    • Explore More
      • SEP IRA vs. Roth IRA
      • 457 Plan for Successful Retirement
      • 401a Rollover Rules
      • How to Retire at 50
      • How to Retire at 55
  • Banking
    • Best Of
      • Best National Banks
      • Best High-Yield Savings Accounts
      • Best Checking Accounts
      • Best Savings Accounts
      • Best CD Rates
      • Best Money Market Accounts
    • Company Reviews
      • BBVA
      • Synchrony
      • Wells Fargo
    • Explore More
      • 9 Banking Alternatives for 2022
      • What is a Credit Union?
  • Home
    • Best Of
      • Best Mortgage Lenders
      • Best Mortgage Refinance Companies
      • Best Home Warranties
      • Best Homeowners Insurance
      • Best VA Loans
      • Best Mortgage Rates
      • Best Moving Companies
      • Best Home Security
    • Guides
      • Home Buying Checklist
      • Online Home Appraisal
      • How Much House Can I Afford?
      • First-time Homebuyer Programs
      • How to Get Approved for a Home Loan
      • Save Money When Building a House
      • How to Save for a Downpayment
      • When to Refinance Your Mortgage
    • Explore More
      • 15 vs. 30-year Mortgage
      • Home Warranty vs. Home Insurance
      • Veterans United Home Loan Review
      • Quicken Loans Review
      • HELOC vs Second Mortgage
      • DCU Mortgage Review
      • Costco Mortgage Program Review
      • USAA Mortgage Loan Review
  • Credit
    • Best Of
      • Best Credit Repair Companies
      • Best ID Theft Protection Services
      • Best Credit Report Options
      • Best Bad Credit Loans
    • Guides
      • How to Build Your Credit Score
      • How to Raise Your Credit Score in 5 Months
      • How to Dispute Your Credit Report
      • Hot to Remove Collections from Your Credit Reports
      • How Identity Theft Destroys Your Credit Score
    • Explore More
      • What is a Good Credit Score?
      • What is a Bad Credit Score?
  • Debt
    • Best Of
      • Best Debt Consolidation Loans
      • Best Personal Loans
      • Best Student Loans
      • Best Student Loan Refinance
    • Guides
      • How to Get Out of Debt
      • How to Get a Personal Loan Approved
      • How to Pay Off Student Loans Faster
      • Should I Consolidate My Debts?
      • Should I File for Bankruptcy?
    • Company Reviews
      • Credible
      • Sofi
Advertiser Disclosure (How We Make Money)
GoodFinancialCents.com has an advertising relationship with the companies included on this page. All of our content is based on objective analysis, and the opinions are our own. For more information, please check out our full disclaimer and complete list of partners.

How To Make Quarterly Estimated Tax Payments

Holly Johnson | September 03, 2021

The pandemic has changed the way we live in so many ways — including how people are working. As the coronavirus runs its course, record unemployment is causing many people to pick up freelance work or piece together side gigs in lieu of traditional employment. According to a new report by Freelancer, a freelancing and crowdsourcing marketplace, freelance work increased by more than 25% between Q1 and Q2 of 2020.

One factor that many newly self-employed workers don’t know about, however, is quarterly estimated taxes. Unlike full-time workers who have taxes automatically withheld from each paycheck by their employer, freelancers have to manually pay taxes every quarter. Keep reading to learn more about this essential task.

Who Needs to Make Quarterly Estimated Tax Payments? 

If you’re working in a different way right now, you might be wondering if you fall into a category of workers that needs to pay quarterly tax payments. 

IRS guidelines state that individuals, including sole proprietors, partners, and S corporation shareholders, must make estimated quarterly tax payments if they expect to owe at least $1,000 in taxes when their tax return is filed. Meanwhile, the threshold for corporations is $500 in anticipated taxes owed. 

If you earn a salary or wage by an employer, on the other hand, your employer should be withholding an appropriate amount of money from your paycheck to cover income taxes. 

IRS guidelines state that individuals, including sole proprietors, partners, and S corporation shareholders, must make estimated quarterly tax payments if they expect to owe at least $1,000 in taxes when their tax return is filed.

Here’s an example that illustrates who’s considered self-employed versus a company-employed worker:

  • Company-employed worker: Someone who delivers pizza for one pizzeria and receives a paycheck from that business is not self-employed, and thus not subject to paying estimated tax payments
  • Self-employed worker: Someone who delivers pizza and other meals through an app, like DoorDash or GrubHub, is considered self-employed and subject to quarterly tax payments

Another example: 

  • Company-employed worker: An in-staff writer who earns a salary from one company doesn’t need to pay quarterly tax payments
  • Self-employed worker: A freelance writer who manages multiple clients and accepts direct payments is self-employed, and thus needs to pay quarterly estimated tax payments

When Are Quarterly Estimated Tax Payments Due? 

The IRS notes that tax due dates that fall on a Saturday, Sunday, or legal holiday are flexible to the next day that isn’t a weekend or legal holiday date. The following chart shows the tax due dates throughout the year, and the periods they cover:

Payment PeriodDue Date
January 1st to March 31stApril 15th
April 1st to might 31stJune 15th
June 1st to August 31stSeptember 15th
September 1st to December 31stJanuary 15th of the following year

How to Calculate Your Estimated Tax Payment

Calculating your estimated quarterly tax payments isn’t always easy, and that’s especially true when you’re not entirely sure how much you’ll earn for the year. However, there are some basic steps you can follow to get you close to the right amount.

1. Look at Last Year’s Income

If you were self-employed last year, looking at the previous year’s income and tax return can provide insight into how much you should pay this year. You’ll need to figure out your adjusted gross income (AGI), your taxable income, the deductions you qualify for, and the tax credits you’ll qualify for the year.

2. Determine Your Income Tax Rate

Once you have an idea of the income you’ll be taxed on — after all deductions and credits are taken into account — determine the tax rate your income falls into. You can find information on 2021 marginal tax rates on the IRS website.

Generally speaking, individuals, including sole proprietors, partners, and S corporation shareholders, use Form 1040-ES to figure out how much they’ll owe throughout the year. This worksheet helps you calculate your estimated quarterly payments based on your tax bill, and the deductions and credits you should take into account.

For those that are self-employed, you’ll need to estimate regular income tax and self-employment tax. First, figure your average tax rate by dividing your income tax, found on Form 1040, by your AGI. Add your average tax rate to 15.3%, which is the self-employment tax rate. You should have a percentage as an answer. 

3. Divide Your Anticipated Annual Tax Bill by 4

Let’s say that your estimated tax liability for the year is $14,000 in income and self-employment taxes for 2021. In that case, divide $14,000 by four to come up with the payments you’ll make during each tax quarter. 

You would owe $3,500 per quarter in taxes based on this example, which you’d pay by April 15th, June 15th, September 15th, and January 15th of the following year. 

4. Start Saving

One challenging aspect of quarterly tax payments is making sure you have the money saved up to pay them when they’re due. Instead of waiting until your tax payment is imminent, it can help to set aside a percentage of your income throughout the year specifically for tax payments. 

If you typically owe 25% of your income in taxes at the end of the year, for example, you could automatically set this amount aside into a high-yield savings account each month. That way, the cash is there when you need it by the quarterly deadlines. 

Where to Submit Quarterly Estimated Tax Payments

When it comes to where to send your quarterly estimated tax payments, you have a few options. The easiest option is paying online using the Electronic Federal Tax Payment System (EFTPS). However, you can also make quarterly federal tax payments using an electronic funds withdrawal or a same-day wire. You can even pay with a check or money order or cash if you want to. 

Note that bank fees might apply if you pay quarterly tax payments using a same-day wire. You can also pay quarterly estimated taxes using a credit card or a debit card online, although a minimum fee of 1.87% is required for credit and you’ll pay a flat fee of at least $2 to pay with a debit card.

Other Things to Know About Estimated Taxes 

Paying quarterly estimated taxes might sound like a pain, and over time and with more practice, the process becomes less intimidating. There are still a few considerations to be aware of as you plan your quarterly estimated tax payments.

  • Penalties might apply. If you underpay quarterly taxes, you might be required to pay a penalty; the amount varies, depending on your situation. This penalty can also apply for late estimated payments, even if you’re owed a tax refund at the end of the year. The IRS recommends using Form 2210 to see if you owe a penalty. 
  • Rules can be different for corporations. Note that the forms you use and the nuances of your tax filing vary depending on the type of business structure you’ve selected for self-employment. For example, corporations typically use Form 1120-W to figure out how much to pay in estimated tax. Corporations also face a lower threshold to determine if they’re required to pay quarterly tax payments. 
  • You can still owe more taxes or get a refund. Paying quarterly estimated taxes doesn’t change the fact that you could owe more money to the IRS or receive a refund back at the end of the year. When filing your tax return for the full year, reconcile your estimated quarterly payments with the amount you actually owe. You’ll get money back if you overpaid, but you’ll still owe more money (and potentially a penalty) if you didn’t pay enough. 

Paying Your Quarterly Estimated Tax

If you feel overwhelmed about the idea of paying quarterly estimated tax payments, you can hire a tax professional to help you. Accountants and tax advisors can take a look at your income, and potential deductions and credits, to help determine how much you should pay. These professionals can even file the appropriate forms on your behalf as an added service.

Related: The Pros and Cons of Hiring a Professional Tax Preparer

If you’re comfortable tackling your quarterly estimated tax payments on your own, you can save money by studying Form 1040-ES and learning how to estimate your taxes yourself. Paying quarterly tax payments can be complicated and messy, but it’s doable with the proper steps. 

Frequently Asked Questions

In general, you need to pay estimated taxes if you meet two criteria: 1) you anticipate having a $1,000 or greater income tax liability (after subtracting any withholdings or credits) for the current tax year, and 2) your withholding and credits are lower than 90% of your income tax liability for the current tax year.

If your income changes, adjust your quarterly estimated payments to reflect the change. You might not face an underpayment penalty, in this situation, but the increase should be reflected in the most recent or upcoming quarterly tax payment to avoid a heavy tax burden when you file your return.

If you made a quarterly estimated tax overpayment in any quarter, you won’t recoup the overpayment until you’ve filed your tax return and the IRS awards you a tax refund. However, if you significantly overpaid in one quarter, you might be able to skip the following quarterly estimated tax payment without a penalty. Speak to your accountant or a tax professional to confirm your specific situation.

If you don’t submit your estimated tax payments each quarter by the deadline, the IRS will bill you for the outstanding income tax debt, plus costly penalties.

Yes, you can make more than four estimated tax payments per year. If you want to make more than four payments, make sure that your cumulative payments by the end of each quarter add up to the total tax liability that’s due for that period.

Facebook LinkedIn Twitter

About the Author

Holly Johnson is a personal finance expert, award-winning writer, and mother of two who covers credit, travel, retirement planning, and budgeting. Her work is featured in publications such as Bankrate and U.S. News and World Report. Johnson owns the travel website Club Thrifty and is the co-author of "Zero Down Your Debt: Reclaim Your Income and Build a Life You’ll Love."

Facebook Twitter LinkedIn


You Might Also Enjoy

How is Passive Income Taxed?

How is Passive Income Taxed?

SEP IRA vs. Roth IRA: What's the difference?

SEP IRA vs. Roth IRA: What's the difference?

Best Tax Software Programs for 2022

Best Tax Software Programs for 2022

8 Best Tax Relief Companies of 2022

8 Best Tax Relief Companies of 2022

How to Handle Taxes and Cryptocurrency

How to Handle Taxes and Cryptocurrency

3 Simple Ways to Do Your Own Taxes

3 Simple Ways to Do Your Own Taxes

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

  • Make Money
  • Manage Money
  • Invest
  • Taxes
  • Insurance
  • Retirement
  • Banking
  • Home
  • Credit
  • Debt
  • About
  • Contact
  • Do Not Sell My Personal Information
  • Facebook LinkedIn Twitter

© 2022 Good Financial Cents®. All Rights Reserved. | Privacy Policy | Disclaimer | Licenses & Disclosures

All written content on this site is for information purposes only. Opinions expressed herein are solely those of AWM, unless otherwise specifically cited. Material presented is believed to be from reliable sources and no representations are made by our firm as to another parties’ informational accuracy or completeness. All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation.

All third party trademarks, including logos and icons, referenced in this website, are the property of their respective owners. Unless otherwise indicated, the use of third party trademarks herein does not imply or indicate any relationship, sponsorship, or endorsement between Good Financial Cents® and the owners of those trademarks. Any reference in this website to third party trademarks is to identify the corresponding third party goods and/or services.