Estimated Taxes

Estimated taxes are payments you make to the IRS throughout the year on income that isn’t subject to regular withholding. This includes money you earn from self-employment, interest, dividends, rental income, or other sources where taxes aren’t automatically taken out.

You generally need to pay estimated taxes if you expect to owe at least $1,000 in federal tax for the year after subtracting any withholding and tax credits. This is common for freelancers, small business owners, landlords, and anyone with significant income outside of a regular paycheck. If you have a job with withholding but also have other income, you may still need to make estimated payments.

Estimated taxes are paid in four installments during the year. For most people, the due dates are:

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

If a due date falls on a weekend or holiday, the deadline moves to the next business day.

To figure out how much to pay:

1. Estimate your total income for the year, including all sources.
2. Subtract any deductions and credits you expect to claim.
3. Calculate the tax you’ll owe on the remaining amount.
4. Divide this tax by four to get your quarterly payment.

The IRS provides worksheets and online tools to help with these calculations. If your income varies during the year, you may need to adjust your payments as you go.

• Keep Good Records: Track all your income and expenses throughout the year.
• Review Regularly: Check your estimated payments every few months, especially if your income changes.
• Pay On Time: Make payments by each due date to avoid penalties and interest.
• Use IRS Tools: Consider using the IRS Direct Pay system or the Electronic Federal Tax Payment System (EFTPS) for easy, secure payments.
• Adjust Withholding: If you have a job, you can ask your employer to withhold more tax from your paycheck to cover your other income, which may reduce or eliminate the need for estimated payments.