What is Estimated Tax Payments?
Quarterly tax payments made by individuals who don't have sufficient tax withholding from wages.
Definition
Estimated tax payments are quarterly payments made to the IRS by individuals who have income not subject to withholding, such as self-employment income, investment income, or foreign income. You generally must make estimated payments if you expect to owe at least $1,000 in tax for the year after subtracting withholding and credits. Payments are due April 15, June 15, September 15, and January 15.
Who Needs to Know This?
Self-employed individuals, freelancers, independent contractors, investors with significant capital gains, and expats with foreign income not subject to withholding.
Key Deadline
April 15, June 15, September 15, January 15
Potential Penalties
Underpayment penalty calculated on unpaid amounts for each quarter
Related Forms
Common Mistakes to Avoid
- 1Not making payments and getting hit with underpayment penalties
- 2Miscalculating required payment amounts
- 3Missing quarterly deadlines
- 4Not adjusting payments when income changes significantly
Related Terms
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