Estimated tax payments are one of the biggest pain points for self-employed entrepreneurs.
They can feel confusing, overwhelming, and honestly—easy to ignore until it’s too late.
This guide will break down everything you need to know so you can stop guessing and start planning:
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What are Estimated Tax Payments?
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Who needs to pay them?
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When are they due?
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How do you actually make a payment?
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How much should you pay?
Let’s dive in.
What are Estimated Tax Payments?
Taxes are considered a “pay as you go” system. When you are working for an Employer and receiving a W-2, you pay your taxes throughout the year and these payments are deducted right through your paycheck before you receive it. When you become Self Employed, that changes because you are now receiving all of your Income in your pocket. Since there is no Employer to withhold these Taxes, you are now responsible to withhold them yourself by way of Estimated Tax Payments. The reason why they are called “Estimated” is because you are literally estimating your income for the year and paying taxes on that amount.
This method serves as a way to pay tax on income that is not subject to tax withholding.
Who is liable to pay estimated tax payments?
It’s not just for business owners. Anyone receiving income without tax withheld may need to pay estimates.
This includes:
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Self-employment income
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Interest and dividends
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Rental income
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Side hustle or freelance income
As a general rule:
If you expect to owe $1,000 or more in taxes when you file your return, you’ll likely need to make estimated payments.
Bonus Tip:
If you’re a W-2 employee and still owe at tax time, it may be time to adjust your withholding. Submit an updated W-4 to your payroll department to have more tax taken out of each paycheck.
When do you pay Estimated Tax Payments?
Estimated Tax Payments are broken down into 4 quarters. The payments are spaced out throughout the year usually due on April, June, September and January of the following year.
Q1- For the period January 1- March 31- Due date: April 15
Q2- For the period April 1- May 31- Due Date: June 15
Q3- For the period June 1- August 31- Due Date: September 15
Q4- For the period September 1- December 31- Due Date: January 15 of the following year
Even though they’re called “quarterly,” the dates don’t always align perfectly with calendar quarters—so be sure to mark your calendar.
How to pay Estimated Tax Payments?
You can pay your Estimated Tax payments by mailing it in using the Form 1040-ES. The easier way is to make your payment online using the IRS’s E-Pay system: https://www.irs.gov/payments
How much to pay in Estimated Tax Payments
That depends on your income, expenses, and deductions—but there are general safe harbor rules to help avoid penalties:
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Pay 100% of last year’s taxes (or 110% if your income is over $150,000), or
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Pay 90% of your expected current year tax liability
Need help calculating your numbers?
Inside of our vault, The House of CEO, I walk you through exactly how to estimate your taxes—including a worksheet to keep it all organized.
Estimated taxes may not be the most exciting part of entrepreneurship, but they’re one of the most important. Get ahead of them now, and your future self will thank you.
