People who work for companies have estimated taxes withheld from their paychecks, but self-employed people, business owners, and those who live on investment income are required to proactively pay estimated taxes on a quarterly basis.
In the United States, income taxes are pay-as-you-go. If you don't keep up with payments, you could end up with a large tax bill in addition to penalties for late payment when it comes time to file your return.
Key Takeaways
- Business owners and self-employed people are required to proactively pay estimated income taxes on a quarterly basis.
- In general, anyone who expects to owe $1,000 or more is required to pay quarterly estimates (unless their taxes are automatically deducted by an employer).
- Estimated tax payment deadlines are usually April 15, June 15, Sept. 15, and Jan. 15 of the following year, with occasional adjustments to the next business day for holidays.
When Are Estimated Tax Payments Due?
Estimated tax payments are typically made incrementally, on quarterly tax dates: April 15, June 15, Sept. 15, and Jan. 15 of the following year, unless a due date falls on a weekend or legal holiday. Here are the dates for 2024:
| 2024 Due Dates for Estimated Taxes | |
|---|---|
| Payment Period | Due Date |
| Jan. 1 to March 31 | April 15, 2024 |
| April 1 to May 31 | June 17, 2024 |
| June 1 to Aug. 31 | Sept. 16, 2024 |
| Sept. 1 to Dec. 31 | Jan. 15, 2025 |
While the first quarter is the first three calendar months of the year, the second "quarter" is only two months long (April 1 to May 31). The third quarter is the next three months (June 1 to Aug. 31), and the fourth quarter covers the final four months of the year.
If a due date falls on a weekend or legal holiday, payments are due on the next business day. In 2022, for example, the deadline to pay first quarter estimated taxes is Monday, April 18, due to the Emancipation Day holiday in Washington, D.C., which falls on Friday, April 15. (By law, Washington, D.C., holidays affect federal tax deadlines.)
The IRS often extends tax filing deadlines for victims of natural disasters. You can consultIRS disaster relief announcementsto determine your eligibility.
Who Pays Estimated Taxes?
Anyone who expects to owe $1,000 in taxes after taking into account any withholding and refundable tax credits such as earned income credits and premium tax credits will need to file estimated taxes.
Self-employed people, small business owners, and anyone else who receives income that has not had taxes withheld from it need to pay estimated taxes to avoid or minimize penalties for late payment.
If you receive pension or annuity income, you can ease the burden by filing Form W-4Pwith the plan administrator to have tax automatically withheld. You can also opt for voluntary withholding on payments such as Social Security benefits and unemployment benefits by filing Form W-4V.
If you have income from an employer in addition to independent contractor income or investment income, you can increase the amount of your withholding from your paycheck by filing a new Form W-4 with your employer in lieu of paying estimated quarterly taxes.
What’s New for Tax Year 2023
When you go to file your 2023 taxes (the ones you'll file in 2024), you'll want to take these updates and adjustments into account:
- The standard deduction for tax year 2023 raises to $27,700 for married couples filing jointly, $13,850 for single taxpayersand married couples filing separately, and $20,800 for heads of household.
- The maximum Earned Income Tax Credit (EITC) for 2023 is $7,430 for taxpayers with three or more qualifying children. To qualify for the EITC, your investment income must have been less than $11,000 in 2023.
- The annual exclusion for gift taxes increases to $17,000 per donee for tax year 2023.
- The maximum amount individuals could contribute to their 401(k), 403(b), most 457 plans, and the federal government's Thrift Savings Plan in 2023 increased to $22,500, up from $20,500 in 2022. Thecatch-up contribution limit for employees aged 50 and over increased to $7,500.
- For IRA accounts, the 2023 contribution limit was raised to $6,500. Catch-up contributions for individuals aged 50 and over remained at $1,000.
Inflation Adjustments
Dozens of tax breaks are adjusted annually for inflation, such as the IRS standard mileage rates. These may get you a tax break even if your income remained consistent from tax year to tax year.
Changes in Circ*mstances
Consider what was new for you in 2023. Did a marriage or divorce change your filing status and the associated tax rates? Has a new home purchase entitled you to deductions for mortgage interest and real estate taxes?
Life events can affect your taxes.
Am I Required to Pay Estimated Taxes?
If you don’t work for an employer who withholds taxes from each paycheck and you expect your tax bill to be more than $1,000, you are required to pay estimated taxes.
Self-employed people and small business owners are among those who pay quarterly estimated taxes.
How Do I Pay My Estimated Taxes?
Fill out Form 1040-ES and mail it, along with a check, to the IRS.
Or you can make estimated payments online via IRS Direct Pay.
What Happens If I Don’t Pay My Estimated Taxes?
If you don’t pay estimated taxes throughout the year, you will end up with a large tax bill when you file your tax return. You will also be subject to penalties for late payment on the taxes, which are owed quarterly.
The Bottom Line
While estimating taxes isn’t an exact science, coming close to the correct amount will help you avoid penalties if you’re mindful of the quarterly deadlines. It can be a good idea to consult a tax professional when questions arise about complex tax issues.
Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in oureditorial policy.
Internal Revenue Service. "Pay As You Go, So You Won't Owe: A Guide to Withholding, Estimated Taxes, and Ways to Avoid the Estimated Tax Penalty."
Internal Revenue Service. "Form 1040-ES, Estimated Tax for Individuals." Page 3.
Internal Revenue Service. "2022 Tax Filing Season Begins Jan. 24; IRS Outlines Refund Timing and What to Expect in Advance of April 18 Tax Deadline."
Internal Revenue Service. "Form 1040-ES, Estimated Tax for Individuals." Page 1.
Internal Revenue Service. "Self-Employed Individuals Tax Center."
Internal Revenue Service. “About Form W-4 P, Withholding Certificate for Pension or Annuity Payments.”
Internal Revenue Service. “About Form W-4 V, Voluntary Withholding Request.”
Internal Revenue Service. "Earned Income and Earned Income Tax Credit (EITC) Tables."
Internal Revenue Service. "Taxpayers Should Review the 401(K) and IRA Limit Increases for 2023."
Internal Revenue Service. "IRS Issues Standard Mileage Rates for 2024; Mileage Rate Increases to 67 Cents a Mile, up 1.5 Cents From 2023."
Internal Revenue Service. “IRS Provides Tax Inflation Adjustments for Tax Year 2024.”
Internal Revenue Service. "Form 1040-ES, Estimated Tax for Individuals." Pages 3-4.
Internal Revenue Service. "Failure to Pay Penalty."
Internal Revenue Service. "Estimated Taxes."
Compare Accounts
×
The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace.
Provider
Name
Description
Part of the Series
Federal Income Tax Guide
Tax Preparation
- Federal Income Tax
- What You Need to Know About Your 2023 Personal Income Taxes
- What You Need to Know About Your Personal Income Taxes
- Understanding State Income Tax vs. Federal Income Tax
Getting Help
- How to Find the Best Tax Preparer for You
- Tax Preparer vs. Software: How to Choose
- Top Software to Prepare Taxes
Tax Strategy
- How to Owe Nothing on Your Federal Tax Return
- Capital Gains Tax 101
- 12 Top Sources of Nontaxable Income
- Can Moving to a Higher Tax Bracket Cause Me to Have a Lower Net Income?
Tax Credits and Deductions
- The Most Overlooked Tax Deductions
- Standard Deduction
- Itemized Deduction
- Tax Credits
Retirement and Your Taxes
- Retirement Plan Tax Prep Checklist
- Will You Pay Taxes During Retirement?
- Retirement Account Withdrawals Affect on Tax Brackets
Tax Filing
- Deadlines for Estimated Taxes
CURRENT ARTICLE
- Top Tax-Filing Mistakes and How to Avoid Them
- Reasons to File an Early Tax Return
- How to File a Tax Extension
Tax Refunds
- Tax Refund
- Tax Refund Anticipation Loan (RAL)
- 7 Reasons You Haven't Received Your Tax Refund
- 6 Cheap Ways to Get a Tax Refund Advance
- Can the IRS Audit You after a Refund?
Tax Security
- Know the Latest IRS Scams
- The Truth About IRS Tax Settlement Firms
