Estimated Quarterly Taxes, Explained Simply
Tax payments you send the IRS four times a year when no one withholds taxes for you.
Estimated quarterly taxes are tax payments you send to the IRS four times a year when nobody is withholding taxes from your income for you.
At a regular job, your employer quietly pulls taxes out of every paycheck and sends them in. When you work for yourself, no one does that. So the IRS asks you to estimate what you will owe and pay it in four chunks across the year instead of one big scary bill in April.
The due dates land roughly in April, June, September, and January. A common rule of thumb is to set aside somewhere between 25 and 30 percent of your self-employment profit for taxes, then send in a portion each quarter. Keeping that money in a separate savings account until it is due keeps you from spending it by accident.
Skipping these payments can cost you. The IRS may add a penalty for underpayment, even if you pay the full amount later in April. It is not a huge penalty, but it is money for nothing, and it is easy to avoid once you build the habit.
Bottom line: If you earn money without taxes taken out, plan to pay the IRS four times a year. Set aside about a quarter to a third of your profit and you will sleep fine in April.
This is general education, not tax or legal advice. Check with a licensed professional about your own situation.
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