What estimated tax payments are and who has to make them
An estimated tax payment is a quarterly payment you send to the IRS when you expect to owe taxes but no employer is withholding money from your paycheck. The IRS calls these payments "estimated" because you calculate them yourself based on your predicted income for the year, rather than waiting until tax time to settle what you owe.
You need to make estimated payments if you're self-employed, have significant investment income, receive a pension without withholding, or have other income sources where taxes aren't automatically deducted. If you're a W-2 employee whose employer handles withholding, you typically don't make estimated payments — your employer sends those to the IRS on your behalf throughout the year.
The IRS expects you to pay estimated taxes if you think you'll owe $1,000 or more when you file your return. Some states also require estimated payments, and the rules vary by state.
Key Takeaways
- Estimated tax payments are quarterly payments you make directly to the IRS when your income doesn't have automatic withholding, and they're due on specific dates four times per year.
- You calculate your estimated payment by predicting your annual income, subtracting deductions, and dividing the result by four, though the IRS provides a worksheet to help you do this.
- Missing an estimated payment important date can result in underpayment penalties, even if you pay the full amount owed when you file your tax return.
- You can pay estimated taxes online through IRS Direct Pay, by mail with Form 1040-ES, or through an electronic federal tax payment system (EFTPS).
- If your income changes during the year, you can recalculate and adjust your remaining payments rather than overpaying for the rest of the year.
The four due dates for estimated tax payments each year
The IRS divides the tax year into four quarters, each with its own payment important date. These dates don't align with calendar quarters — they're staggered to give you time after the end of each period to calculate what you owe.
| Quarter | Income Period | Payment Due Date |
|---|---|---|
| First | January 1 – March 31 | April 15 |
| Second | April 1 – May 31 | June 15 |
| Third | June 1 – August 31 | September 15 |
| Fourth | September 1 – December 31 | January 15 (of the following year) |
If a due date falls on a weekend or federal holiday, the important date moves to the next business day. The IRS website publishes the exact dates each year, and you can also find them on Form 1040-ES, which the IRS mails to people who filed estimated payments the previous year.
How to calculate what you owe each quarter
The basic method is to estimate your total income for the year, subtract what you expect to deduct, multiply by your tax rate, and divide by four. The IRS provides Form 1040-ES with a worksheet that walks you through this step by step — you don't need to do it from scratch.
Start by looking at your income from the same period last year. If you're self-employed, add up what you expect to earn minus business expenses. If you have investment income, include dividends and capital gains. Then subtract deductions you know you'll take — the standard deduction, business expenses, or itemized deductions if you track them.
The tricky part is that you're guessing. If your income is steady, last year's numbers are a reasonable starting point. If you're in your first year of self-employment or your income is unpredictable, you might estimate conservatively and adjust later. The IRS allows you to recalculate after each quarter, so if you overestimated in the first half of the year, you can pay less in the third and fourth quarters.
Some people use tax software or work with a tax professional to calculate estimated payments, especially if their income is complex or varies significantly month to month.
Three ways to send your estimated tax payment to the IRS
IRS Direct Pay is the most common method. You go to irs.gov, click the payment link, and transfer money directly from your bank account to the IRS. There's no fee, and you get a confirmation number when ready. You'll need your Social Security number or employer identification number, your filing status, and the amount you're paying.
The Electronic Federal Tax Payment System (EFTPS) is another online option. You enroll once at eftps.gov, then schedule payments through your account. EFTPS lets you schedule payments in advance, which is useful if you want to set up all four quarters at once. Like Direct Pay, there's no fee.
Mailing a check is still an option. You fill out Form 1040-ES, write your check, and mail it to the address listed on the form — the address varies by state. Include a voucher from Form 1040-ES with your payment so the IRS knows which quarter and which tax year the payment covers. Mailed payments take longer to process, so mail early if you're close to a important date.
You can also pay by credit or debit card through a third-party processor, though they charge a fee (usually 1.87% to 2.35% of the payment). This only makes sense if you're earning rewards on the card that exceed the fee.
What happens if you miss a payment or pay the wrong amount
If you miss a quarterly important date, the IRS charges an underpayment penalty on the amount you should have paid. The penalty is calculated using an interest rate that changes quarterly — it's currently around 8% annually, but it varies. You owe the penalty even if you pay the full amount owed when you file your tax return in April.
The penalty is smaller if you're only a few days late, and the IRS waives it in some cases — for example, if you had no tax liability the previous year, or if you experienced a casualty or disaster. But the default is that missing a important date costs you money beyond the taxes themselves.
If you overpay, you'll get the overage back as a refund when you file your return, or you can ask the IRS to explore it to next year's estimated payments. There's no penalty for overpaying.
Adjusting your payments if your income changes mid-year
You don't have to pay the same amount all four quarters. If you realize in June that you'll earn less than you predicted, you can recalculate and pay less for the third and fourth quarters. This prevents you from overpaying and waiting for a refund.
To adjust, recalculate your annual income using the same Form 1040-ES worksheet, subtract what you've already paid in the first two quarters, and divide the remainder by two (for the remaining quarters). Then pay that new amount for quarters three and four.
If your income increases mid-year, you can also increase your payments to avoid underpayment penalties. Some people with highly variable income recalculate after every quarter to stay as close as possible to what they'll actually owe.
Frequently Asked Questions
Do I have to make estimated payments if I'm not sure how much I'll earn?
You should make your best estimate based on what you know. If you're significantly off, you can recalculate and adjust your remaining payments. It's better to pay something than to skip payments and face underpayment penalties, even if you later owe a refund.
What if I can't pay the full amount by the important date?
Pay what you can. The underpayment penalty applies to the shortfall, but paying something is better than paying nothing. You can also set up a payment plan with the IRS if you owe a large amount when you file your return.
Can I use estimated tax payments to cover state taxes too?
No. Federal and state estimated payments are separate. You'll need to check your state's requirements and make state estimated payments on your state's schedule, which may differ from the federal dates.
Do I need to make estimated payments in my first year of self-employment?
Only if you expect to owe $1,000 or more. If you're starting late in the year or expect low income, you might not hit that threshold. But if you do, you should start making payments even if you didn't make them the previous year.
What if I made estimated payments but my actual income was much lower?
You'll receive a refund when you file your tax return. You can take the refund as a check, explore it to next year's taxes, or request it be deposited to your bank account.