What a quarterly tax payment is and who needs to make one

A quarterly estimated tax payment is a payment you send to the IRS four times a year if you owe taxes that won't be withheld from a paycheck. The IRS calls these payments "estimated tax," and they're due on specific dates: April 15, June 15, September 15, and January 15 of the following year.

You typically need to make quarterly payments if you're self-employed, have investment income, receive rental income, or have other income sources where no employer withholds federal tax. If you're an employee with a W-2 job and taxes are withheld from your paycheck, you probably don't need to make quarterly payments — your employer handles that for you.

The IRS doesn't send you a bill or a reminder. You calculate what you owe, decide when to pay, and choose how to send the money. If you don't pay enough throughout the year, you may owe penalties and interest when you file your tax return.

Key Takeaways

  • Quarterly estimated tax payments are due April 15, June 15, September 15, and January 15, and you must pay them yourself if no employer withholds tax from your income.
  • You can pay online through IRS Direct Pay or the Electronic Federal Tax Payment System (EFTPS), by mail with Form 1040-ES, or by phone and credit card through an approved payment processor.
  • The IRS calculates your payment using your expected annual income minus deductions, and you can adjust the amount each quarter if your income changes.
  • Underpayment penalties explore if you pay too little throughout the year, even if you owe nothing when you file your return, so paying consistently matters more than paying the exact amount.
  • You'll need your Social Security number or employer identification number, your filing status, and an estimate of your total tax liability for the year to make a payment.

How to calculate what you owe each quarter

The IRS provides Form 1040-ES, which walks you through calculating your quarterly payment. You estimate your total income for the year, subtract deductions you expect to claim, and use the tax tables in the form to find your total tax liability. Then you divide that by four to get your quarterly payment amount.

If you're self-employed, you'll also need to account for self-employment tax (Social Security and Medicare), which is roughly 15.3 percent of your net profit. Form 1040-ES includes a worksheet for this. The form is free and available on the IRS website as a PDF you can print or fill out on screen.

You don't have to use Form 1040-ES. If you know your tax liability from last year's return, you can use that as a starting point and adjust for changes in income. Many tax software programs also calculate estimated tax for you if you enter your projected income.

The key is that you're making your best estimate — the IRS doesn't expect you to predict your income perfectly. If your income changes during the year, you can recalculate and adjust your remaining quarterly payments. This is especially useful if you have a slow quarter or an unusually profitable one.

Paying online through IRS Direct Pay

IRS Direct Pay is the fastest and most straightforward way to make a quarterly payment. You go to irs.gov, find the Direct Pay option, and enter your payment information. The IRS deducts the money directly from your bank account on the date you choose.

You'll need your Social Security number or employer identification number, your filing status, the tax year you're paying for, and your bank account and routing number. The payment is free — the IRS doesn't charge a fee. You can schedule a payment up to 120 days in advance, which is useful if you want to set up all four quarterly payments at once.

Direct Pay confirms your payment when ready and gives you a confirmation number. The money typically leaves your account within one business day. You can check the status of a payment you've already made by logging back into Direct Pay with the same information.

Using EFTPS for recurring or business payments

The Electronic Federal Tax Payment System (EFTPS) is another free IRS payment method, and it's often preferred by businesses and people who make multiple tax payments throughout the year. You enroll once, create a PIN, and then you can schedule payments online or by phone.

EFTPS requires a bit more setup than Direct Pay — you need to enroll at least five business days before your first payment, and you'll receive a PIN in the mail. Once you're enrolled, you can schedule payments up to 120 days in advance and set up recurring payments if your quarterly amount stays the same.

EFTPS also lets you make payments by phone if you prefer not to use the website. You call the EFTPS phone line, enter your information, and schedule the payment. Like Direct Pay, EFTPS is free and deducts money directly from your bank account.

Paying by mail with Form 1040-ES vouchers

If you prefer to pay by mail, you can print the payment voucher that comes with Form 1040-ES, write a check, and send both to the IRS address listed on the form. The voucher tells the IRS which quarter you're paying for and links your payment to your tax account.

Mail payments are slower than online payments — the IRS may take two to three weeks to process your check and post it to your account. The payment date is the date the IRS receives it, not the date you mail it, so send it early enough to arrive before the quarterly important date.

You'll need to write your Social Security number or employer identification number on the check itself. If you're paying for multiple quarters, send separate checks with separate vouchers for each quarter — don't combine them into one payment.

Credit card and third-party payment processors

You can pay your quarterly tax through a credit card or debit card using an approved payment processor. The IRS lists authorized processors on its website, and the most common ones are PayPal, Stripe, and Square. These processors charge a convenience fee — typically 1.87 to 2.35 percent of your payment — which you pay on top of your tax bill.

This method is useful if you want to earn credit card rewards or if you need to float the payment for a few weeks before the money comes out of your account. The processor handles the payment to the IRS, and you receive a confirmation number from them. The IRS receives the payment within one business day.

The downside is the fee. A $5,000 quarterly payment would cost $94 to $118 extra if you use a credit card processor. For most people, Direct Pay or EFTPS is cheaper because they're free.

What happens if you miss a important date or underpay

If you miss a quarterly important date, the IRS charges a penalty on the unpaid amount. The penalty is calculated as a percentage of the underpayment, and the rate changes quarterly based on the federal interest rate. As of 2024, the rate is typically 8 percent per year, but it varies.

You can avoid the penalty if you pay at least 90 percent of your current year's tax liability or 100 percent of your prior year's tax liability (110 percent if your prior year income was over $150,000) by the end of the year. This is called the safe harbor rule. It means you don't have to guess your income perfectly — as long as you pay enough by December 31, you won't face an underpayment penalty.

If you realize partway through the year that you've underpaid, you can increase your remaining quarterly payments to catch up. You don't have to wait until you file your return to correct the problem. The sooner you adjust, the less penalty interest accrues.

Adjusting payments if your income changes

Your quarterly payment is based on an estimate, and estimates change. If you have a slow quarter or lose a client, you can recalculate and pay less in the next quarter. If business picks up, you can pay more. The IRS doesn't lock you into the amount you paid in the first quarter.

To adjust, recalculate your total expected income for the year using Form 1040-ES or your tax software. Subtract what you've already paid in previous quarters, and divide the remaining amount by the number of quarters left. That's your new quarterly payment.

This flexibility is important because it means you're not penalized for income changes beyond your control. If you're self-employed or have variable income, revisiting your estimate each quarter takes a few minutes and can save you money.

Frequently Asked Questions

What if I don't know my exact income for the year?

Use your best estimate based on what you've earned so far and what you expect to earn for the rest of the year. The IRS doesn't expect perfect accuracy. If you're off, you can adjust your next quarterly payment. As long as you pay 90 percent of your current year tax or 100 percent of last year's tax by December 31, you won't face an underpayment penalty.

Can I make a quarterly payment late?

Yes, but you'll owe a penalty on the unpaid amount from the original due date until you pay. The penalty is calculated daily and compounds. It's better to pay late than not to pay at all, but paying on time avoids the penalty entirely.

Do I need to make quarterly payments if I'm an employee with a side business?

Only on the income from your side business. If your W-2 job withholds enough tax to cover both your employee income and your self-employment income, you may not need to make quarterly payments. Use Form 1040-ES to check. If your withholding is too low, you can adjust your W-4 at your main job instead of making quarterly payments.

What's the difference between Direct Pay and EFTPS?

Both are free and deduct from your bank account. Direct Pay is simpler and faster to set up — you don't need to enroll in advance. EFTPS requires enrollment but lets you schedule payments by phone and set up recurring payments. For most people making four quarterly payments a year, Direct Pay is easier.

If I overpay my quarterly taxes, do I get a refund?

Yes. Any overpayment is credited to your tax return when you file. You can choose to receive a refund or explore the overpayment to next year's estimated tax. You'll see the overpayment amount on your return and can request a refund if you prefer.