What Are Quarterly Estimated Taxes?

Quarterly estimated taxes are payments made four times a year to cover income that isn’t subject to withholding. 

For instance, if you’re self-employed, earn freelance income, or generate revenue through investments, you’re likely responsible for these payments. Instead of waiting until tax season and risking underpayment penalties, estimated taxes allow you to pay the IRS throughout the year.



The IRS expects taxpayers to pay as they earn. If your income isn’t automatically taxed (as it would be for salaried employees), estimated payments help ensure you meet this “pay-as-you-go” requirement.

Who Needs to Pay Quarterly Estimated Taxes?

You might need to pay estimated taxes if you meet the following criteria:



• Self-Employment: Business owners, independent contractors, gig workers, and freelancers who earn above $400 annually.
• Investment Income: Individuals earning significant income through dividends, capital gains, or interest.
• Non-Traditional Income: Income from rental properties, partnerships, alimony, or side hustles.
• Corporations: Generally, corporations need to pay estimated taxes if they expect to owe $500 or more in taxes for the year.

The golden rule? If you will owe more than $1,000 in taxes after subtracting any tax credits or withholdings, chances are you need to make estimated payments.

Are There Exceptions?

You don’t need to pay quarterly estimated taxes if:



• You had no tax liability the prior year.
• You meet the "safe harbor" rule, which allows you to avoid penalties if your estimated payments cover at least 90% of your current tax liability or 100% of last year’s taxes (110% for higher earners).

How to Calculate Your Payments

Calculating quarterly estimated taxes isn’t as intimidating as it might seem. Here’s a step-by-step approach to get it done:

1. Estimate Your Annual Income 

Start by estimating how much you expect to earn for the year. This includes income from all sources, such as freelance work, investments, and side businesses.

2. Determine Your Taxable Income 

Subtract any deductions, credits, or exemptions from your annual income to get your taxable income. This might include business expenses, education credits, or standard deductions.

3. Apply Tax Rates 

Use the IRS tax brackets for your filing status (single, married filing jointly, etc.) to calculate your tax liability.

4. Add Self-Employment Tax (If Applicable) 

If you’re self-employed, remember to account for the self-employment tax, which covers Social Security and Medicare contributions.

5. Divide and Pay 

Take your total estimated tax liability and divide it into four equal payments. These are due on:

• April 15
• June 15
• September 15
• January 15 (of the following year)

Need help crunching the numbers? Tax professionals like Sela Tax specialize in helping individuals and businesses calculate their estimated taxes while maximizing deductions.

How to Make Quarterly Estimated Tax Payments

Making your estimated payments is simple. The IRS offers multiple payment options:



• Online: Use the IRS Direct Pay service or the Electronic Federal Tax Payment System (EFTPS).
• By Mail: Send a check along with Form 1040-ES.
• Mobile Apps: The IRS2Go app allows you to make quick and secure payments from your smartphone.

Pro tip: Set calendar reminders or automate your payments to avoid missing deadlines.

Why Staying Compliant Matters

Failing to pay quarterly estimated taxes can result in underpayment penalties and interest charges. The IRS imposes these penalties because unpaid taxes are essentially viewed as an interest-free loan.



Beyond avoiding penalties, staying compliant with quarterly payments prevents the stress of a massive payment bill at year-end.

Expert Tips for Staying on Track

Taking control of your quarterly tax obligations doesn’t have to be difficult. Here are some proven strategies to stay compliant and stress-free:

• Keep Accurate Records: Maintain detailed financial records for all income streams and expenses.
• Use Accounting Software: Tools like QuickBooks or Wave simplify bookkeeping and ensure you’re tracking taxable income.
• Work with a Tax Professional: Tax consultants, like those at Sela Tax, can help you understand tax regulations, identify deductions, and ensure you pay just the right amount.
• Adjust Payments as Needed: If your income fluctuates throughout the year, adjust your estimated payments accordingly to avoid overpaying or underpaying taxes.

How Sela Tax Can Help

At Sela Tax, we’ve been assisting individuals and businesses in Florida for over 10 years. Our experienced consultants:



• Calculate quarterly estimated taxes tailored to your unique income.
• Ensure you maximize applicable deductions to lower your liability.
• Provide guidance on IRS tax code updates and compliance.

Whether you’re a freelancer, business owner, or investor, we’re here to simplify your tax burden. Say goodbye to penalties and hello to peace of mind.

Take Control of Your Quarterly Taxes Today

Paying estimated taxes can feel daunting at first, but it’s a vital step for anyone earning non-traditional income. By complying with IRS guidelines and making payments on time, you set yourself up for financial success and avoid the risk of penalties.

If you’re unsure where to begin or how much to pay, getting professional assistance can make all the difference. Contact Sela Tax & Accounting to guide you through the process and help you stay ahead of your tax responsibilities. Start your hassle-free tax experience today byscheduling a free consultation.