What is the IRS Estimated Tax | Quarterly Tax?

Who must pay Estimated Taxes?

If you have Taxable Income and you have not paid any taxes or you did not have enough taxes taken out of your pay check from your employer, you are required to estimate and pay your taxes to the IRS quarterly. You may be subject to a penalty if you do not pay quarterly tax payments. Generally, most taxpayers will avoid a penalty if they owe less than $1,000 in tax after subtracting their withholdings and credits, or if you have paid at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller. There are special rules, so be sure to speak to your tax professional or CPA.

Estimated Taxes

Estimated taxes are a method to pay income tax and self-employment tax, as well as other taxes during the year in addition to any withholding you have taken out of your paycheck from your employer. If you do not have an employer, you must pay tax four times a year called Quarterly Estimated Tax Payments

Estimated quarterly tax payments may be due if you have taxable income from:

  • Self-employment
  • Investments
  • Interest
  • Dividends
  • Alimony
  • Rent
  • Lottery winnings
  • Gambling winnings
  • Gains from the sale of assets
  • Other income

When should I pay my Quarterly estimated taxes?

The tax year is divided into four payment periods:

For the Period Due Date:
January 1 to March 31 April 15
April 1 to May 31 June 15
June 1 to August 31 September 15
September 1 to December 31 January 15 of next year

Saturday, Sunday, Holiday Rule

If the due date for an estimated tax payment falls on a Saturday, Sunday, or legal holiday, the payment will be on time if you make it on the next day that is not a Saturday, Sunday, or a holiday.

What if my company has a fiscal tax year?

If your tax year does not start on January 1, your payment due dates are:

  • The 15th day of the 4th month of your fiscal year
  • The 15th day of the 6th month of your fiscal year
  • The 15th day of the 9th month of your fiscal year
  • The 15th day of the 1st month after the end of your fiscal year

You do not have to make the last payment listed above if you file your income tax return by the last day of the first month after the end of your fiscal year and pay all the tax you owe with your return.

How do I Pay my Estimated Taxes?

  1. If you have a credit from last years tax return, that counts as a payment.
  2. Send in your payment with a payment voucher Form 1040-ES
  3. Make an online electronic payment. To pay your taxes online or for more information, click HERE.