How to make federal estimated tax payments

Table of Contents Show What are estimated tax payments? When estimated quarterly taxes are due Who should make estimated quarterly tax payments? People who aren't having enough withheld The self-employed Landlords and investors (maybe) How to calculate quarterly estimated taxes How to pay estimated quarterly taxes Frequently asked questions Do you have to pay estimated taxes quarterly? Can you pay estimated taxes anytime? What happens if I forget to pay? How can I make this easier? New to our site? The Electronic Federal Tax Payment System® tax payment service is provided free by the U.S. Department of the Treasury. After you've enrolled and received your credentials, you can pay any tax due to the Internal Revenue Service (IRS) using this system. MAKE A PAYMENT ENROLL You asked, we listened! The EFTPS® Web site was recently updated based on feedback from users like you. You can now: Receive your confirmation by email. Verify the bank account that will be used when making a payment Change the bank account used for a payment Self-select your PIN when creating an additional enrollment Terminate an enrollment you are no longer using Please note: Your tax payment is due regardless of this Web site's availability. You can always make a tax payment by calling our voice response system at 1.800.555.3453. Follow the prompts to make your payment. What You Need to Know The IRS continues to remind taxpayers to watch out for email schemes. Taxpayers will only receive an email from EFTPS if they have opted in for email notifications when they sign up for email through EFTPS. Report all unsolicited email claiming to be from the IRS or an IRS-related function to . You must be enrolled to use the EFTPS® tax payment service. To enroll, click on Enrollment at the top of this page and follow the steps. If this is your first time enrolling in EFTPS®, your information will need to be validated with the IRS. After this process is complete you will receive a personal identification number (PIN) via U.S. Mail in five to seven business days at your IRS address of record. Payments using this Web site or our voice response system must be scheduled by 8 p.m. ET the day before the due date to be received timely by the IRS. The funds will move out of your banking account on the date you select for settlement. This EFTPS® tax payment service Web site supports Microsoft Internet Explorer for Windows, Google Chrome for Windows and Mozilla Firefox for Windows. You may use this Web site and our voice response system (1.800.555.3453) interchangeably to make payments. If you are required to make deposits electronically but do not wish to use the EFTPS® tax payment service yourself, ask your financial institution about ACH Credit or same-day wire payments, or consult a tax professional or payroll provider about making payments for you. Please note: These options may result in fees from the providers. Payments through third parties may have earlier cutoff times; please check with them for their deadlines.

In the U.S., income taxes are collected on an ongoing basis. For many of us, this means that an employer pays federal and state taxes on our behalf by withholding a certain amount from each paycheck.

If you earn income as a freelancer, or if you receive certain types of non-wage income, you may need to pay what the IRS calls "estimated quarterly taxes." Here's what those are and how they work.

What are estimated tax payments?

Estimated tax payments are taxes paid to the IRS throughout the year on earnings that are not subject to federal tax withholding. This can include self-employment or freelancer earnings, or income you've earned on the side such as dividends, realized capital gains, prizes and other non-wage earnings.

You may also be liable for making estimated tax payments if you are an employee but the withholding on your earnings doesn’t fully cover your tax liability, meaning what you expect to owe for the tax year. The amount of money withheld on your paycheck depends on the information you provided to your employer on your W-4.

When estimated quarterly taxes are due

Estimated tax payments should be made as your income is earned, and the IRS sets deadlines for collection on a quarterly basis. For 2022, here's when estimated quarterly tax payments are due:

These dates don’t coincide with regular calendar quarters, so plan ahead. You can also make payments more often if you like, says Bess Kane, a CPA in San Mateo, California.

“I think it's easier to make 12 smaller payments than four larger payments," says Kane. "If you owe $1,200 for the year, I would rather pay $100 a month than $300 four times a year. And if we're talking bigger numbers, it gets pretty extreme.”

🤓Nerdy Tip

You don’t have to make the payment due in mid-January if you file your tax return and pay what you owe by January 31.

Who should make estimated quarterly tax payments?

People who aren't having enough withheld

The IRS says you need to pay estimated quarterly taxes if you expect:

1. You'll owe at least $1,000 in federal income taxes this year, even after accounting for your withholding and refundable credits (such as the earned income tax credit), and

2. Your withholding and refundable credits will cover less than 90% of your tax liability for this year or 100% of your liability last year, whichever is smaller. The threshold is 110% if your adjusted gross income last year was more than $150,000, or $75,000 for married filing separately.

The self-employed

Independent contractors, freelancers and people with side gigs who expect to owe more than $1,000 in taxes are prime candidates for estimated quarterly taxes, says Kane. That’s because there’s no tax automatically withheld on their income, she explains.

Businesses

Corporations may also need to make estimated income tax payments if they'll owe at least $500 for the tax year.

Landlords and investors (maybe)

People with rental income and investments might need to pay estimated quarterly taxes— even if their employers withhold taxes from their paychecks. “Those might not always be calculated into their withholding amount, and then they come up short and end up having to pay an estimated tax penalty and don't even know what estimated taxes are,” says Thomas Mangold, a CPA in Austin, Texas.

How to calculate quarterly estimated taxes

There's more than one way.

Method 1

• You can estimate the amount you’ll owe for the year, then send one-fourth of that to the IRS. For instance, if you think you’ll owe $10,000 for 2022 you'd send $2,500 each quarter. This may work best for people whose income is pretty much the same throughout the year, or for people who have a good idea of what their income is going to be.

Method 2

• Another method is to estimate your annual tax liability based on what you’ve already earned during the year. This is often better for people whose income varies. Essentially, you annualize your tax at the end of each quarter based on a reasonable estimate of your income and deductions so far this year. The IRS has a worksheet to help you do the math.

Either way, you'll use IRS Form 1040-ES to show your income estimate and project your tax liability. IRS Publication 505 has all the rules and details, and good tax software will help you fill out the form and do the math.

If it turns out that you overestimated or underestimated your earnings, you can complete another Form 1040-ES and refigure your estimated tax for the next quarter. When you file your annual return, you’ll likely need to attach an extra form — IRS Form 2210 — to explain why you didn’t send equal payments. If you paid too much, you can get a refund or apply the overage as a credit to future payments.

The calculations can get complicated quickly, so it’s a good idea to consult with a qualified tax preparer if you have questions. Plus, there are special rules for farmers, fishermen and certain household employers.

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How to pay estimated quarterly taxes

There are several ways you can get your estimated tax payments to the IRS, including:

• Your online IRS account.

• The IRS2Go app.

• IRS Direct Pay.

• The U.S. Treasury’s Electronic Federal Tax Payment System.

• By debit or credit (additional fees apply).

• Pay in cash at certain IRS retail partners.

You can also mail your estimated tax payments with IRS Form 1040-ES using a payment voucher, but the IRS highly encourages taxpayers to consider electronic methods of payment.

» MORE: Even more ways you can make an IRS payment

Frequently asked questions

Do you have to pay estimated taxes quarterly?

According to the IRS, you don’t have to make estimated tax payments if you’re a U.S. citizen or resident alien and you had no tax liability for the previous full tax year. And you probably don’t have to pay estimated taxes unless you have untaxed income.

Can you pay estimated taxes anytime?

Estimated taxes are due as income is earned, and the IRS sets quarterly deadlines for their collection. You can opt to send four payments per year following the IRS schedule, pay in smaller increments more frequently or cover your estimated yearly liability in your first quarterly payment — just make sure you’re covering your tax liability for each quarter to avoid penalties.

What happens if I forget to pay?

The IRS will charge penalties if you didn’t pay enough tax throughout the year. The IRS can charge you a penalty for late or inadequate payments even if you're due a refund when you file your tax return.

• You were a victim of a casualty, disaster or other unusual circumstance, or

• You’re at least 62, retired or became disabled this year or last year, and your underpayment was due to “reasonable cause” rather than “willful neglect”

How can I make this easier?

“If you're married and your spouse has a regular job and is having taxes withheld, he or she may have enough taxes withheld to cover the two of you,” Kane explains.

You can accomplish this by giving his or her employer a new Form W-4, instructing how much tax to withhold from each paycheck. You can change your W-4 any time. If you’re getting a pension or annuity, use Form W-4P.