For all the freelancers, small business owners and self-employed individuals out there, staying on top of when the estimated tax payments are due is important to help you stay within the IRS tax payment guideline and avoid penalty. Making estimated tax payments also helps you avoid financial shortfall when you file your tax returns.
How to File Your Quarterly Estimated Tax
For Federal payment:
- Calculate how much you made during the quarter (i.e., profit)
- Calculate how much you owe. A quick way to do this is to calculate your full year effective tax rate, and multiply that percentage by the amount from line #1. You can also you a simple tax calculator like this one at SmartAsset.
- Subtract what you owe (line #2) by what you already paid (if any) during the quarter. The result is the amount of money you have to send to the IRS.
- Print out the IRS 1040-ES Form, fill out everything, and mail it along with a check to the IRS.
For your state, follow the steps above using the tax rate and form for your state.
When to Pay Your Quarterly Estimated Tax
Here’s the full schedule for 2019 tax year.
|Payment Period||Due Date|
|Q1 = January 1 – March 31||April 15|
|Q2 = April 1 – May 31||June 15|
|Q3 = June 1 – August 31||September 15|
|Q4 = September 1 – December 31||January 15 of the following year.|
Some important notes
- Q2 is based on only 2 months of taxable income
- Q4 is based on 4 months of taxable income and due the following year
Remember you have to pay both the IRS and your State (unless you’re living in one of the states that does not collect income tax). Hopefully, you have been saving up for this and have money in your savings to cover the tax payments.
Frequently Asked Questions
Shouldn’t the June date actually be July?
June is the correct date. Q2 payment is due faster than the rest and you only have to pay taxes against 2 months’ worth of earnings (April and May). Subsequently, this means Q3 payment occurs in September and Q4 payment encompasses 4 months of income instead of three.
How can I lower my tax payments?
You can lower your tax liabilities by participating in a retirement plan designed for self-employed individuals and business owners.
Will the IRS tells me how much money I have to send?
No, you have to calculate the amount for both the Federal and States taxes. For Federal, you have to complete Form 1040-ES and send it along with your payment. For State, you have to search online for the appropriate form, complete it and send it in with your payment.
Alternatively, you can submit your Federal payment electronically via EFTPS; and most States should have the online equivalent.
Where should I send the estimated tax payments?
For Federal payment, the answer depends on where you live. Check the instruction included in Form 1040-ES for the correct mailing address. Similarly, check with your State tax department for the correct mailing address for your State payment.
Do quarterly tax payments have to be received by the due date or just post marked by then?
The deadline is the postmarked date.
Can the quarterly payment amount change each quarter?
Yes, the amounts can be different for each quarter depending on your earnings.
More About Quarterly Estimated Tax Payments
- Self-Employment, Estimated Tax, and Safe Harbor — This article explains self-employment tax and quarterly estimated tax payment, along with how you could avoid making the quarterly payments if you are able to stay within the boundary of the safe harbor rule.
- Self-Employment Tax and IRS Estimated Tax Payment — This article explains how to calculate estimated tax payment amount and how to make the payment.
- Tips for Paying Self Employment Taxes
- Quarterly Estimated Taxes Due Dates, Calculation, and Late Payment Penalty — This article explains what you need to do about late payment and how to avoid the problem in the first place.
Pinyo Bhulipongsanon is the owner of Moolanomy Personal Finance and a Realtor® licensed in Virginia and Maryland. Over the past 20 years, Pinyo has enjoyed a diverse career as an investor, entrepreneur, business executive, educator, financial literacy author, and Realtor®.