If you are self-employed or make money as an independent contractor or freelancer, April 15 isn’t the only tax-related date you need to have on your calendar. You should be making tax payments four times a year—once per quarter—and one of these deadlines is coming up on Jan. 16.
The IRS collects estimated quarterly taxes from those who earn income on a Form 1099 (as opposed to a W-2, which is the classification for employees) and who expect to owe $1,000 or more to the government for the year. These payments are due four times annually, though they’re not spaced evenly by quarter.
The final payment for the 2023 tax year is on Tuesday, Jan. 16. Here’s how to determine if you need to pay your bill and how to do so.
How do estimated tax payments work?
Those who earn income on a Form 1099, such as freelancers, independent contractors, and self-employed individuals, don’t have any tax withheld from their pay, and instead are responsible for paying the IRS directly. Some W-2 earners may also have to make estimated payments if too little is withheld, as do some landlords, investors, and businesses.
These payments are due quarterly at a minimum, though you can make more frequent smaller payments if you prefer, and they cover income earned during that quarter. In 2024, the deadlines are as follows:
Jan. 16 for income earned Sept. 1–Dec. 31, 2023
April 15 for income earned Jan. 1–March 31, 2024
June 17 for income earned April 1–May 31, 2024
Sept. 16 for income earned June 1–Aug. 31, 2024
If you earn enough income in a quarter to owe taxes, you must make an estimated payment or risk an underpayment penalty.
How do I pay estimated taxes?
If you expect to owe $1,000 or more in taxes this tax season, you should consider making estimated tax payments, though there may be exceptions depending on your total owed and what you paid in taxes last year. Again, 2023 Q4 payments are due on Jan. 16 this year.
Technically, estimated payments are due as income is earned, so if you haven’t made any payments for quarters in which you earned untaxed income, you may be penalized, and you should plan ahead by setting money aside for quarterly payments this year. To avoid an underpayment penalty, your best bet is to aim for 100% of what you paid the previous year, or 110% if you earn more than $150,000.
You can estimate your quarterly payment by using last year’s tax bill and dividing by four (if you think your income will be about the same and consistent across quarters) or by annualizing using the IRS’ tax worksheet (more accurate if your income fluctuates a lot throughout the year). Taxes for 1099 earners can get complicated, so it might make sense to work with a professional.
You’ll need a good idea of how much you’ve been paid as well as deductible expenses and the amount you’ve contributed to HSAs and IRAs. To prepare for tax season, you should be keeping careful track of this income and expenditures already. As a reminder, you have to pay taxes on all income even if you don’t receive a 1099 for every client or employer.
When you’re ready to make (or schedule) your estimated tax payment, you can do so online by logging into your IRS Online Account, enrolling in the Electronic Federal Tax Payment System (EFTPS), or using the IRS2Go app. Otherwise, you can pay via credit or debit card or digital wallet (with a processing fee) or bank transfer (Direct Pay).