The U.S. tax system runs on a “pay-as-you-go” principle, which means you’re expected to pay taxes as you earn income, not just when filing your annual tax return. For employees, this happens automatically through paycheck withholding (based on your Form W-4). Similarly, retirees often have taxes deducted from their Social Security benefits or retirement distributions.
But what about those who are self-employed or earn income from sources like dividends, rental properties, interest, capital gains, or alimony? In these cases, taxes aren’t automatically withheld, so you’re responsible for making estimated tax payments throughout the year.
What Are Estimated Tax Payments?
Estimated tax payments are periodic payments you send to the IRS to cover taxes on income that hasn’t been taxed at the source. Unlike automatic paycheck deductions, you calculate and submit these payments yourself, typically four times a year. Though often called “quarterly payments,” the intervals don’t always align perfectly with the calendar year’s quarters.
Estimated Tax Payment Deadlines for 2025
To stay on track, here’s the IRS schedule for estimated tax payments in 2025:
Payment Period Income Earned Due Date
4th Quarter Payment (from 2024) Sept. 1 – Dec. 31, 2024 Jan. 15, 2025
1st Quarter Payment 2025 Jan. 1 – March 31, 2025 April 15, 2025
2nd Quarter Payment 2025 Apr. 1 – May 31, 2025 June 17, 2025
3rd Quarter Payment 2025 June 1 – Aug. 31, 2025 Sept. 16, 2025
4th Quarter Payment 2025 Sept. 1 – Dec. 31, 2025 Jan. 15, 2026
Important Notes:
Residents in disaster-designated areas may get extended deadlines.
If you file your 2024 tax return and pay the balance by Jan. 31, 2025, you won’t need to make the final estimated payment for 2024 (due Jan. 15, 2025).
Who Needs to Pay Estimated Taxes?
Estimated tax payments are required if:
You earn taxable income (e.g., self-employment income, dividends, rental income, etc.) not subject to withholding.
Your income surpasses certain thresholds that make withholding insufficient.
For example, if you earn taxable income in August 2025, you don’t need to pay until the next deadline (Sept. 16, 2025). You can even split payments into installments if needed.
Special Rule for Farmers and Fishers:
If over two-thirds of your income comes from farming or fishing, you’re eligible for a simplified schedule—only one estimated payment by Jan. 15, 2025, or none if you file and pay your taxes by March 1, 2025.
Who Needs to Pay Estimated Taxes?
Estimated tax payments are required if:
You earn taxable income (e.g., self-employment income, dividends, rental income, etc.) not subject to withholding.
Your income surpasses certain thresholds that make withholding insufficient.
For example, if you earn taxable income in August 2025, you don’t need to pay until the next deadline (Sept. 16, 2025). You can even split payments into installments if needed.
Special Rule for Farmers and Fishers:
If over two-thirds of your income comes from farming or fishing, you’re eligible for a simplified schedule—only one estimated payment by Jan. 15, 2025, or none if you file and pay your taxes by March 1, 2025.
How to Calculate Estimated Taxes
Start by estimating your adjusted gross income (AGI), taxable income, deductions, credits, and expected taxes for the year. Use the IRS Form 1040-ES worksheet to calculate your quarterly payments. Your prior year’s tax return can serve as a helpful reference.
Pro Tips:
If circumstances or tax laws change, recalculate your payments.
Overestimating taxes? Adjust your remaining payments using Form 1040-ES.
How to Make Payments
You can pay estimated taxes via:
Online: Use the Electronic Federal Tax Payment System (EFTPS).
Mail: Send a check or money order with Form 1040-ES.
Other Methods: Payments can also be made via debit/credit card or in cash at IRS-approved locations.
Penalties for Missing Payments
Failing to pay enough taxes during the year can lead to IRS penalties, even if you qualify for a refund later. While exceptions exist (e.g., for retirees, unexpected events, or disabilities), it’s best to ensure you meet payment deadlines.
What About State Taxes?
If your state has income tax, you may need to make separate estimated payments. Check with your state tax agency for deadlines, as they may differ from federal ones.
By staying proactive and organized with your estimated tax payments, you can avoid penalties and simplify tax season. It’s a small effort that saves a big headache down the road!
Read More
