By Christian BrinkleyLicensed NC Insurance Agent, NPN 22217190, NC Life & Health · Updated October 14, 2026 · 4 min read
The US tax system is pay-as-you-go. Employees pay as they go through withholding on every paycheck. But if you have income with no withholding, the system still expects its money during the year. That is what estimated quarterly taxes are for. Who owes them? Anyone who expects to owe tax above a certain threshold after accounting for withholding and credits. In practice, that means freelancers, gig workers, and the self-employed, landlords collecting rent, investors with significant dividends or capital gains, retirees with pension or investment income and no withholding, and anyone with a profitable side business. If a meaningful chunk of your income arrives with no tax taken out, you are probably in estimated-tax territory.
The threshold for “expects to owe” is set by the IRS and it is not
If you had a tax bill last April that surprised you, that is your sign.
How do they work? Four times a year, you send the IRS a payment toward the tax you expect to owe for the year. The due dates are roughly in the middle of January, April, June, and September. They are not evenly spaced and they are not exactly quarterly, which confuses everyone the first time. Put the actual dates on your calendar, because the IRS publishes them each year and they can shift slightly.
You can pay online through the IRS website, by phone, or by mail with a voucher. Online is the easiest and gives you a confirmation record. Each payment gets credited to your account, and when you file your return, the total of your estimated payments counts just like withholding.
How much should you pay?
You are aiming to cover what you will owe. There are a couple of accepted ways to get there. One is to estimate your actual income for the year and pay tax on it as you go, quarter by quarter. That works well if your income is steady or if you are good at forecasting. The other is the safe harbor approach: pay enough that you are protected from the underpayment penalty even if your estimate is off.
A lot of people discover this penalty the first year they go
They earn good money, spend it, file in April, and get hit with a tax bill plus a penalty for not paying along the way. It feels unfair until you realize employees were paying all year through withholding. The quarterly system is just the self-employed version of the same thing.
There are exceptions and ways out. If you had no tax liability last year, you generally do not owe estimated tax this year. Farmers and fishermen get special timing rules. And if your income arrives unevenly, like a big commission in December, there is a method to annualize your income so you are not penalized for quarters when you earned nothing. That method takes extra paperwork but it exists for exactly that situation.
If your income jumps midyear, a new client, a big project
The quarterly system lets you adjust. Paying more in the later quarters to catch up is allowed, though it does not erase an early shortfall for penalty purposes. Still better than waiting until April.
State taxes usually have their own estimated payment system with their own dates and thresholds. Do not forget the state. A lot of people handle the federal side perfectly and get surprised by their state in April.
The bottom line: if nobody is withholding tax from your income, the IRS still wants its money four times a year. Pay as you go, use the safe harbor if you want simplicity, and put the dates on your calendar before the year starts.
This is general information, not tax advice
Thresholds, percentages, and due dates change, so check irs.gov for the current year, and talk to a tax professional if your income picture is complicated.
Questions people ask me about this
How much should you pay?
You are aiming to cover what you will owe. There are a couple of accepted ways to get there. One is to estimate your actual income for the year and pay tax on it as you go, quarter by quarter. That works well if your income is steady or if you are good at forecasting.
What should I know about the threshold for?
If you had a tax bill last April that surprised you, that is your sign. How do they work? Four times a year, you send the IRS a payment toward the tax you expect to owe for the year. The due dates are roughly in the middle of January, April, June, and September.
What should I know about the first year they go?
They earn good money, spend it, file in April, and get hit with a tax bill plus a penalty for not paying along the way. It feels unfair until you realize employees were paying all year through withholding. The quarterly system is just the self-employed version of the same thing. There are exceptions and ways out.
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