Quarterly Estimated Taxes: A Complete Guide for Self-Employed Workers

Unlike W-2 employees who have taxes withheld from every paycheck, freelancers and self-employed workers are responsible for paying their own taxes throughout the year. The IRS expects you to make these payments quarterly using Form 1040-ES - and if you underpay, you'll owe penalties and interest on top of your tax bill.

Here's everything you need to know to get quarterly estimated taxes right.

Who Needs to Pay Estimated Taxes?

The IRS generally requires you to make quarterly payments if both of the following are true:

1. You expect to owe $1,000 or more in federal tax after subtracting withholding and refundable credits.
2. Your withholding and credits will cover less than the smaller of 90% of this year's tax liability or 100% of last year's tax liability (110% if your AGI exceeded $150,000).

If you had any self-employment income and didn't have enough withheld from a W-2 job to cover the resulting tax, you almost certainly need to make quarterly payments.

The Four Due Dates

Quarterly tax payments follow a slightly uneven schedule:

Payment Period	Due Date
January 1 - March 31	April 15
April 1 - May 31	June 16
June 1 - August 31	September 15
September 1 - December 31	January 15 (following year)

If a due date falls on a weekend or holiday, the deadline moves to the next business day. For 2026, Q2 is due June 16 because June 15 falls on a Sunday.

Mark these dates now. Missing even one payment triggers a penalty calculated from the due date until the payment is received.

How to Calculate Your Estimated Tax

There are two main approaches:

Method 1: Current-Year Estimate

Estimate your total income, deductions, and credits for the year, then calculate the tax you'll owe. Divide by four for your quarterly payment amount. The IRS provides a worksheet in the Form 1040-ES instructions that walks through this step by step.

For self-employment income, remember to include:

• Federal income tax on your net profit
• Self-employment tax (15.3% on the first $176,100 of net earnings for 2025, then 2.9% on amounts above that)

Method 2: Safe Harbor

If your income is unpredictable, use the safe harbor method - pay at least 100% of last year's total tax liability, divided into four equal payments. If your adjusted gross income was over $150,000 last year ($75,000 if married filing separately), the threshold increases to 110% of last year's tax.

This guarantees you won't owe an underpayment penalty regardless of how much you actually earn this year.

Underpayment Penalties

If you don't pay enough by each quarterly due date, the IRS charges an underpayment penalty. The penalty rate is based on the federal short-term interest rate plus 3 percentage points and is calculated separately for each quarter.

You can avoid the penalty if:

• You owe less than $1,000 after subtracting withholding and credits
• You paid at least 90% of the current year's tax liability
• You paid at least 100% (or 110%) of the prior year's tax liability

Use Form 2210 to calculate the penalty or request a waiver if you had an uneven income pattern.

State Estimated Taxes

Most states with an income tax also require quarterly estimated payments on a similar schedule. Common states where freelancers need to pay attention:

• California: Uses the same federal due dates; 30% of annual estimate due with Q1, 40% with Q2, 0% with Q3, and 30% with Q4
• New York: Follows the standard 25% per quarter schedule
• Texas, Florida, Nevada, Washington: No state income tax - no state estimated payments required

Check your state's franchise tax board or department of revenue for specific rules.

How to Make Payments

You have several options for paying federal estimated taxes:

• IRS Direct Pay (irs.gov/directpay) - Free bank transfer
• EFTPS (Electronic Federal Tax Payment System) - Free, must enroll in advance
• Credit/debit card - Processed through third parties; small fee applies
• Check or money order - Mail with a Form 1040-ES voucher to the IRS

When making payments online, select "Estimated Tax" as the payment type and choose the correct tax year and quarter.

Tips for Managing Quarterly Payments

Set aside money after every payment you receive. A good rule of thumb: move 25-30% of each freelance payment into a separate savings account dedicated to taxes.

Adjust as you go. If your income changes significantly during the year, recalculate your estimated payments. You're not locked into equal quarterly amounts - you can use the annualized installment method on Form 2210 to pay based on when you actually earned the income.

Track deductions in real-time. Every deductible expense reduces your taxable income and therefore your quarterly payment. The more deductions you track during the year, the more accurate your estimates will be - and the less likely you are to overpay.

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The Takeaway

Quarterly estimated taxes are one of the least intuitive parts of self-employment, but they're not optional. The key is having a system: know your due dates, calculate based on real numbers (not guesswork), and track your deductions as you earn.

WriteOff calculates your estimated quarterly payments automatically based on your actual income and deductions throughout the year. It sends reminders before each due date, shows exactly how much to pay, and adjusts as your income changes - so you're never surprised and never overpay.