Making estimated tax payments is important since the U.S. tax system operates on a "pay-as-you-go" basis. This means the IRS expects you to pay a portion of your income as soon as you earn it.
As an employee, as many know, the government automatically withholds taxes from your paycheck based on your Form W-4. Also, retirees may have taxes taken from their Social Security payments and retirement plan distributions.
However, what if you are self-employed or don't have taxes withheld from other sources of taxable income, such as dividends, capital gains, interest, rental income, or alimony? In that case, you are responsible for making estimated tax payments to the IRS.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
What are estimated tax payments?
Estimated tax payments are the taxes you pay to the IRS throughout the year to account for income you've earned that wasn't subject to tax withholding.
- When paying estimated taxes, you usually make four equal payments and follow the IRS's yearly schedule. (More on that below.)
- Estimated tax payments are commonly referred to as "quarterly" payments, even though they might not necessarily be three months apart or cover three months of income.
Estimated tax payment due dates 2024
The table below shows the payment deadlines for 2024. (Note that some people will have extended IRS tax deadlines for estimated tax payments due to residing or working in IRS-designated disaster areas.)
| Payment | When Income Earned in 2023 | Due Date |
| 1st Payment | Sept. 1 to Dec. 31, 2023 | Jan. 16, 2024 |
| 2nd Payment | Jan. 1 to March 31, 2024 | April 15, 2024 |
| 3rd Payment | Apr. 1 to May 31, 2024 | June 17, 2024 |
| 4th Payment | June 1 - Aug. 31, 2024 | Sept. 16, 2024 |
Sometimes, you can deviate from the set estimated tax payments schedule by following specific rules.
For example, if you pay all your estimated taxes for 2024 before Tax Day, you will not have to make additional tax payments for the rest of the year.
Additionally, if you submit your 2024 federal income tax return by Jan. 31, 2025, and pay the entire balance due, you won't have to make the final estimated payment for 2024, which would normally be due on Jan. 15, 2025.
Who should make quarterly estimated tax payments?
You only need to make estimated tax payments if you have taxable income.
Note: The most common taxable income for many people is earned income (e.g., wages, tips, bonuses, etc.). However, some people are surprised that they may have to pay taxes on unemployment income, taxes on Social Security, or other taxes on other retirement income.
But for estimated taxes, suppose you have taxable income in Aug. 2024. In that case, you don't have to make an estimated tax payment until Sept. 16, 2024. You can pay the entire estimated tax by the Sept. 15 due date or pay it in two installments by Sept. 16, 2024, and January 2025.
If more than two-thirds of your income is from farming or fishing, you only need to make one estimated tax payment for the 2024 tax year, due by Jan. 15, 2025. If you meet the farming/fishing income threshold and file and pay your taxes by Mar. 1, you don't need to make estimated payments.
How to calculate estimated taxes
To calculate your estimated tax payments, use Form 1040-ES. First, determine your expected adjusted gross income (AGI), taxable income, taxes, deductions, and credits for the year. Then follow the instructions on the Form 1040-ES worksheet to assist you.
You can refer to your previous year's tax return as a general guide. Your goal is to estimate your expected annual income.
If you overestimated your tax, you can adjust your estimated tax payments using another Form 1040-ES worksheet. You can also recalculate your tax estimate if your circumstances change or tax law changes impact your tax liability for the year.
How to make estimated tax payments
To pay estimated taxes, use Form 1040-ES. You can pay by check, cash, money order, credit card, or debit card.
There are also online payment options like the Electronic Federal Tax Payment System (EFTPS). The instructions for Form 1040-ES explain the different payment methods.
Penalties for late estimated tax payments
Failing to pay enough taxes during the year can lead to IRS penalties. Even if you anticipate a refund when you eventually file your return, the IRS may penalize late or insufficient estimated tax payments.
There are some potential exceptions to tax penalties, however. For example, if you've experienced an unexpected event like a casualty, disaster, or unusual circumstance. Or if you're at least age 62, retired, or have become recently disabled, and your underpayment resulted from a "reasonable cause" and not "willful neglect."
Since these exceptions are limited, aim to pay most of your 2024 tax liability through withholding or estimated tax payments.
State estimated taxes
If you live in a state with income tax, remember that you might need to make estimated tax payments to your state as well.
The due dates for state payments may differ from the federal dates, so check with your state's tax agency.
Related Content
-
How to Rank Your Financial PrioritiesCircumstances are different for everyone, but this adviser with 20-plus years of experience shares some insights on getting your financial priorities in order.
-
Can You Define Baby Boomers? Look at Trump and HarrisTrump and Harris are bookends of the sprawling Baby Boomer generation, which spans 18 years. No wonder they have different world views.
-
Best States to Buy Chocolate Candy Tax-FreeState Taxes There’s something spooky this Halloween and it’s not just the ghouls. Find out if your state’s sales tax takes a bite out of sweet savings.
-
Five Ways Your Boss Can Step Up in the Aftermath of a HurricaneTax Relief The IRS offers some tax advantages for employers that financially help their employees during federally declared disasters.
-
Six Tax Deadlines for October 15Tax Deadlines You might know about the federal tax return extension deadline, but did you know about these other tax deadlines for Oct. 15?
-
IRS Sued for Millions Over Employee Retention Credit (ERC) DelaysTax Credits The pandemic-era tax refunds for businesses have been a contention point for the agency, now employers are fighting for their cash.
-
Hurricane Helene Aftermath: IRS Tax Relief and How to HelpTax Relief Following the destruction in the southeast U.S., IRS officials and several states have extended tax deadlines for affected taxpayers. Here are the payments and filings that qualify.
-
New Jersey Ends Sales Tax Break for EVs: What to KnowState Tax Discover alternative savings now that New Jersey is phasing out its sales tax exemption on EVs.
-
Landmark Lawsuit Targets Unfair NYC Property TaxesProperty Tax New York’s highest court just weighed in on the city’s embattled property tax code. Here's what it could mean for you.
-
IRS Solar Tax Credit Payouts Soar as Scams Target HomeownersClean Energy Clean energy tax credits are paying off for many, but experts warn of increasing scams.
