Question 1

What are quarterly estimated tax payments?

Accepted Answer

Quarterly estimated tax payments are periodic payments you make to the IRS throughout the year to pay income tax on earnings that aren't subject to withholding. This includes self-employment income, rental income, investment gains, and other non-wage income. They're due four times a year: April 15, June 16, September 15, and January 15 of the following year.

Question 2

What is the safe harbor rule for estimated taxes?

Accepted Answer

The safe harbor rule lets you avoid underpayment penalties if you pay at least 100% of your prior year's tax liability (or 110% if your AGI was over $150,000). Alternatively, you can pay 90% of your current year's tax liability. Meeting either threshold protects you from penalties regardless of how much you ultimately owe.

Question 3

When are quarterly estimated taxes due in 2025?

Accepted Answer

For tax year 2025, the quarterly estimated tax deadlines are: Q1 (January-March) due April 15, 2025; Q2 (April-May) due June 16, 2025; Q3 (June-August) due September 15, 2025; Q4 (September-December) due January 15, 2026.

Question 4

How do I calculate my quarterly estimated tax payment?

Accepted Answer

Calculate your expected annual income, subtract business deductions and the standard deduction, then apply the tax brackets for your filing status. Add self-employment tax (15.3% of 92.35% of net self-employment income), subtract any withholding, and divide by 4 for your quarterly payment amount.

Question 5

What is the penalty for not paying quarterly estimated taxes?

Accepted Answer

The IRS charges an underpayment penalty based on the federal short-term rate plus 3 percentage points (approximately 8% in 2025). The penalty is calculated on the amount underpaid for each quarter and the number of days it remained unpaid. You can avoid penalties by meeting the safe harbor requirements.

Question 6

Do I need to pay quarterly taxes if I have a W-2 job?

Accepted Answer

If you have additional income beyond your W-2 wages (such as freelance work, rental income, or investment gains), you may need to make quarterly estimated payments on that income. However, you can often avoid quarterly payments by increasing your W-2 withholding to cover the additional tax liability.