Why quarterly taxes exist
The U.S. tax system is "pay as you go." When you're an employee, your employer withholds taxes from every paycheck and sends them to the IRS on your behalf throughout the year. You never have to think about it.
When you're self-employed, a freelancer, or an LLC owner, no one withholds anything. Every dollar you earn arrives gross. The IRS still expects to receive tax payments throughout the year — which is why the quarterly estimated tax system exists. Instead of withholding, you send payments directly four times a year.
Many people new to self-employment spend all their income, then discover in April that they owe a large tax bill — plus penalties for not paying throughout the year. The penalty applies even if you pay everything in full by April 15. Start making quarterly payments from your first quarter of self-employment income.
Do you need to make quarterly payments?
You are generally required to make quarterly estimated tax payments if both of these are true:
- You expect to owe at least $1,000 in federal taxes for the year after subtracting withholding and credits
- Your withholding and credits will cover less than the smaller of 90% of your current year tax liability or 100% of your prior year tax liability (110% if prior year AGI exceeded $150,000, or $75,000 if married filing separately)
| Your situation | Quarterly payments required? |
|---|---|
| Freelancer or contractor with no W-2 income | ✅ Almost certainly yes — start from Q1 |
| LLC owner taking distributions (not S-Corp) | ✅ Yes — self-employment tax applies to net profit |
| W-2 employee with significant side income | ⚠️ Maybe — depends on amount; consider increasing W-4 withholding first |
| S-Corp owner paying yourself salary | ✅ Payroll handles it — but check if distributions create additional liability |
| Employee with only W-2 income | ❌ No — employer withholding covers it |
| Retiree with pension and investment income | ⚠️ Maybe — if withholding doesn't cover 90% of tax owed |
The 2026 quarterly payment deadlines
Quarterly payments for Tax Year 2026 income are due on these dates:
For Q4, you can skip the January 15 payment if you file your complete tax return AND pay any remaining balance in full by January 31 (for 2026 estimated tax, the date is February 1, 2027). This can simplify year-end planning if you're ready to file early.
How to calculate your payment
There are two methods. Choose the one that works better for your situation:
Pay based on last year's taxes
Pay 100% of last year's total tax liability in four equal installments (110% if prior year AGI > $150,000). No calculation needed — just divide last year's tax bill by 4.
Pay based on estimated current income
Estimate your annual net income, calculate income tax + self-employment tax, divide by 4. More accurate if income is lower than last year.
Quick calculator: estimate your quarterly payment
Enter your estimated annual figures to get a rough quarterly payment estimate. This uses a simplified 22% income tax rate — actual rates vary by income and filing status.
How to actually make the payment
The IRS offers several ways to pay. In order of convenience:
- IRS Direct Pay (IRS.gov/payments) — Free, instant, no account needed. Pay directly from your bank account. You get immediate confirmation. This is the recommended method for most people.
- EFTPS (eftps.gov) — Free, allows you to schedule payments in advance. The IRS no longer accepts new EFTPS enrollments from individual taxpayers; current users can still use it for now. New individual payers can use IRS Direct Pay or their IRS Online Account instead.
- Debit or credit card — Available through IRS-authorized processors, but carries a processor fee (credit cards currently 1.75%–1.85% with a $2.50 minimum; debit cards a flat fee of about $2). Generally not worth it unless you're earning credit card rewards that offset the fee.
- Check by mail — Mail a check payable to "United States Treasury" with Form 1040-ES payment voucher. Slowest and least recommended — no instant confirmation.
Open a separate savings account and label it "Tax Reserve." Every time you receive a payment, immediately transfer a fixed share into this account — for example 25–30%, as a budgeting rule of thumb, not an IRS rule; adjust it to your own estimated tax. When quarterly payment time comes, the money is already there — no stress, no scramble. Pay from this account, and whatever is left at year-end after your April filing is a bonus.