Your first estimated tax payment is due April 15 of the year you owe it
If you are self-employed, a freelancer, a gig worker, or earn income that has no taxes withheld, the IRS expects you to pay taxes four times a year instead of once. These are called estimated tax payments. The first one is always due on April 15 — the same day individual income tax returns are due. The other three follow in June, September, and January of the next year.
The reason for this schedule is straightforward: the IRS wants money throughout the year, not all at once. If you wait until April to pay what you owe, you may owe a penalty even if you eventually pay the full amount. Making quarterly payments keeps you current and avoids that penalty.
You do not have to make estimated payments if your tax bill will be under $1,000 for the year, or if you expect a refund. But if you are unsure whether you owe, it is safer to make the payment than to skip it and face a penalty later.
Key Takeaways
- The first estimated tax payment is due April 15 each year, with three more due in June, September, and January.
- You owe estimated taxes if you are self-employed, a contractor, a gig worker, or have income with no taxes withheld, and your expected tax bill is $1,000 or more.
- You can pay online through IRS Direct Pay, by phone, by mail, or through a tax professional, and the IRS accepts payment up until midnight on the due date.
- Missing a payment or paying late can result in a penalty even if you pay the full amount owed by April 15 of the following year.
- Your estimated payment amount is based on your expected income for the year, not your actual income from the previous year.
Who has to make estimated tax payments
You owe estimated taxes if you earn money that does not have taxes automatically taken out. This includes self-employment income, rental income, investment income, and income from gig work like driving or freelancing. It also includes income from a side business, even if you have a full-time job where taxes are withheld.
The IRS has a straightforward rule: if you expect to owe $1,000 or more in taxes for the year, you must make estimated payments. If your expected tax bill is less than $1,000, you can skip estimated payments and pay everything when you file your return in April. If you expect a refund, you do not owe estimated payments.
The key word is "expect." You base your estimated payment on what you think you will earn this year, not what you earned last year. If your income changes during the year, you can adjust your remaining payments.
How to calculate what you owe
The IRS provides a worksheet called Form 1040-ES that walks you through the calculation. You estimate your total income for the year, subtract deductions you are may have access to to, and calculate the tax on that amount. Then you divide by four to get your quarterly payment.
If you are self-employed, the calculation includes self-employment tax — the Social Security and Medicare taxes that employees normally split with their employer. Because you are both employee and employer, you pay both halves. This makes your total tax bill higher than someone with the same income who is a W-2 employee.
Many people use tax software or a tax professional to calculate their estimated payment, especially the first year. Once you know the amount, you can often keep paying the same amount each quarter unless your income changes significantly.
How to pay your estimated tax
The IRS offers several ways to pay. IRS Direct Pay is free and lets you pay online from your bank account at irs.gov. You can schedule a payment in advance, and the IRS will tell you the exact date the money will leave your account. Electronic Federal Tax Payment System (EFTPS) is another free option that works similarly.
You can also pay by phone, by mail, or through a credit card or debit card (though credit card payments charge a processing fee). If you use a tax professional to file your return, they can often submit your estimated payments for you.
The payment must reach the IRS by midnight on April 15 to be on time. If April 15 falls on a weekend or holiday, the important date moves to the next business day. The IRS website shows the exact important date each year.
What happens if you miss the April 15 important date
If you do not pay by April 15, the IRS charges a failure-to-pay penalty. This penalty is a percentage of the unpaid tax, and it grows the longer you wait. You also owe interest on the unpaid amount. Even if you pay the full year's taxes by April 15 of the next year when you file your return, you still owe the penalty for missing the quarterly payment.
The penalty is usually small — often $25 to $50 for a first missed payment — but it adds up if you miss multiple quarters. The IRS may also reduce or waive the penalty if you have a good reason for missing the important date and you pay as soon as you realize the mistake.
If you realize in March that you will owe estimated taxes, it is better to make the April 15 payment late than not to make it at all. A late payment still triggers a penalty, but skipping it entirely triggers a larger one.
Adjusting your payments if your income changes
Your estimated payment is based on what you expect to earn, not what you actually earned. If your income drops during the year, you can lower your remaining quarterly payments. If your income rises, you should increase them to avoid a large bill in April.
You do not have to file a form to adjust your payment — you straightforward pay a different amount in the next quarter. However, if you want to make a big change, you can file an amended Form 1040-ES to document the reason. This can help if the IRS questions why your payments changed.
Some people use the annualized income method, which lets you pay different amounts each quarter based on when you actually earned the money. This works well if your income is uneven — for example, if you earn most of your money in the fall. The Form 1040-ES worksheet includes instructions for this method.
Keeping records of your payments
When you pay through IRS Direct Pay or EFTPS, the IRS sends you a confirmation number. Save this number and the confirmation email. When you file your return in April, you will need to report how much you paid in estimated taxes, and the confirmation number helps prove you paid on time if the IRS ever questions it.
If you pay by mail, keep a copy of the check and the payment voucher. If you pay through a tax professional, ask them for a record of the payment. The IRS matches your reported payments to their records, but having your own documentation makes the process faster if there is ever a discrepancy.
Frequently Asked Questions
What if April 15 falls on a weekend or holiday?
The IRS moves the important date to the next business day. In 2024, for example, April 15 is a Monday, so the important date is April 15. The IRS website lists the exact important date each year. If you are unsure, pay by the date shown on irs.gov to be safe.
Can I pay my estimated tax with a credit card?
Yes, but you will pay a processing fee of 1.87% to 2.35% of the payment amount. Most people use a debit card or bank account transfer instead to avoid the fee. If you have rewards on your credit card, the rewards might offset the fee, but do the math first.
Do I have to pay estimated taxes if I have a full-time job with taxes withheld?
Only if you have additional income — from self-employment, rental property, or investments — that brings your total expected tax bill to $1,000 or more. The taxes withheld from your job count toward your total tax bill, so you may owe less in estimated payments than someone with the same self-employment income but no job.
What if I do not know how much I will earn this year?
Use your income from last year as a starting point. You can adjust your payments as the year goes on and you have a better sense of what you will earn. If you are very uncertain, pay a conservative estimate (higher rather than lower) to avoid penalties, then adjust downward in later quarters if your income is lower than expected.
Can I make one big payment instead of four quarterly payments?
Technically yes, but the IRS penalizes you for paying late on the three quarters you skipped. It is better to make four on-time payments than one late payment, even if the total amount is the same.