For many self-employed individuals, freelancers, and small business owners, tax season can feel overwhelming—especially when faced with a large tax bill. However, making quarterly tax payments throughout the year can help ease the burden and keep your finances on track.
If you’re unsure whether quarterly tax payments are right for you or how they can benefit you during tax season, this guide will explain why they’re a smart financial strategy.
What Are Quarterly Tax Payments?
Quarterly tax payments are estimated tax payments made four times a year to the IRS (and state tax agencies, if applicable) instead of paying all at once when you file your tax return. These payments cover:✔ Income tax✔ Self-employment tax (Social Security & Medicare)✔ Other taxes not withheld from your paycheck
Anyone who expects to owe $1,000 or more in taxes for the year is generally required to make quarterly tax payments. This includes:
Self-employed individuals (freelancers, independent contractors, gig workers)
Small business owners
Investors with significant income from stocks, rental properties, or dividends
How Quarterly Tax Payments Make Tax Season Easier
1. Avoid a Large Tax Bill
Instead of facing a hefty tax bill in April, quarterly payments spread out your tax liability over the year. This makes it easier to manage your cash flow and prevents financial strain.
Example: If you owe $8,000 in taxes for the year, paying $2,000 every quarter is much easier than paying the full $8,000 all at once.
2. Reduce the Risk of IRS Penalties
The IRS requires taxpayers to pay at least 90% of their tax liability throughout the year. If you underpay, you could face penalties and interest. Making quarterly payments ensures you stay compliant and avoid unnecessary fees.
3. Easier Budgeting & Financial Planning
Quarterly payments help you stay on top of your finances by breaking taxes into manageable chunks. This makes it easier to budget for business expenses, savings, and other financial goals.
Tip: Setting aside a portion of each paycheck for taxes can prevent last-minute scrambling when payments are due.
4. Prevent Surprises at Tax Time
Nobody likes an unexpected tax bill. Quarterly payments help you estimate and track your tax obligations throughout the year, so there are no surprises when you file your return.
5. Peace of Mind
By staying ahead of your tax payments, you can reduce stress and focus on growing your business rather than worrying about a big tax bill.
How to Calculate & Pay Quarterly Taxes
Step 1: Estimate Your Annual Income
Use last year’s tax return as a reference, or project your earnings for the year.
Step 2: Calculate Estimated Taxes
Self-employed individuals typically pay 15.3% in self-employment tax plus income tax based on their tax bracket.
Use IRS Form 1040-ES to estimate your payments.
Step 3: Pay the IRS Each Quarter
Quarterly tax payments are due on:
April 15 (Q1)
June 15 (Q2)
September 15 (Q3)
January 15 (Q4, for the previous year)
You can pay online through the IRS Direct Pay system, by mail, or using the IRS EFTPS system.
Making quarterly tax payments is a smart way to manage your tax obligations, avoid penalties, and reduce financial stress when tax season arrives. By planning ahead and breaking your payments into four manageable installments, you can stay on top of your finances and focus on what matters most—growing your business.
Need help calculating your estimated taxes? Consult with us to ensure you're making the right payments on time!