When are quarterly taxes due in 2024?

You probably have April 15th etched into your brain as tax due date. But if you’re self-employed, do freelance work, or are a gig worker, you may need to file estimated taxes each quarter. Sometimes, these are called quarterly tax payments.

Not sure when your quarterly taxes are due or if you need to file them? We’ll walk you through the rules so you stay on the right side of the Internal Revenue Service.

What are the estimated tax payments and when are they due?

Estimated income tax returns are made periodically to the IRS on income that is not subject to recurring income.

The US tax system is pay as you go. In fact, taxpayers are expected to pay income tax instead of waiting until April 15.

When you have a traditional W-2 job, your employer withholds you from paying taxes, so you don’t have to worry about paying the IRS throughout the year. But taxes are not automatically withheld from other sources of income, which is where estimated taxes come in.

You may need to pay estimated taxes if you have the following types of taxable income:

However, if you also earn a salary or have a pension and have enough money stashed away to cover your tax liability from other sources of income, you may not need to estimates of tax payments.

You will generally need to make estimated tax payments if the following are true:

1. You expect to owe the IRS at least $1,000 after withholding and any refundable tax credits, AND

2. You expect that the amount withheld for tax from your earnings (plus any tax refunds) will add up to the lesser of 90% of your total tax liability this year OR 100% of your tax liability your tax return last year. But if your adjusted gross income (AGI) was more than $75,000 (if you’re a single filer) or $150,000 (if you’re married filing a joint return), you’ll have to withhold 110% of the tax liability. last year’s tax. avoid possible punishment.

Although estimated tax payments are sometimes called quarterly taxes since they are due four times a year, this name is a misnomer. Estimated tax payment periods do not come every three months; instead, they range from two to four months, as you’ll see in the chart below.

The estimated quarterly tax payment periods fall on the 15th of the months of January, April, June and September. If the deadline falls on a weekend or legal holiday, it must arrive on the next business day.

You can also make regular estimated tax payments if doing so makes your budget easier. For example, you can pay your taxes monthly or weekly to avoid sending the IRS a large change every few months.

How to calculate estimated taxes

You can use IRS Form 1040-ES to calculate how much you owe in estimated taxes. The form contains a worksheet that helps you calculate the amount due based on your estimated total adjusted income and tax deductions for the year.

There are two main ways to estimate how much you owe:

• Based on last year’s earnings: If you owed $10,000 in taxes last year and expect your income and tax liabilities to be the same this year, you can pay $2,500 each payment period. This method is usually best for those whose income does not change much from month to month or year to year.

• It depends on the amount you get at the time of payment. You can choose to calculate tax estimates based on your current income. Say you earned $20,000 between June and August and your effective tax rate is 20%. You can pay $4,000 in estimated taxes based on your tax bill in those three months. This method is often best for those whose income fluctuates seasonally or annually.

Note that if you have a business or are a freelancer or gig, you will have to account for self-employment tax. Basically with a W-2 job, you and your employer usually kick in 7.65% of your wages for Social Security and Medicare taxes. However, if you are self-employed, you are responsible for both the employee and employer side of this tax, or 15.3 percent of most people’s income.

If you find that you have overpaid your tax when you file your return for the calendar year, you can get the extra money as a tax refund. You can also use an overpayment to estimate your future tax bill.

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How to pay estimated taxes

There are several ways to make estimated tax payments, including:

• Online using your IRS account at IRS.gov/payments

• Using the Electronic Tax Payment System (EFTPS)

• Same day wire transfer through your bank

• Electronic funds transfer

• By phone

• Mailing a check or money order

• In cash at IRS retail partners

You can use these methods to make payments when you file your federal income tax return on tax day.

What is the penalty for not paying quarterly taxes?

If you do not pay quarterly taxes as required, you will owe interest on the balance that should be added to the IRS underpayment penalty. Usually, this penalty is 0.5% of the tax bill for each month (or partial month) that the money is not paid, although the penalty is added to 25% of the amount you owe.

You may be able to avoid a penalty in some cases, such as:

• You are unable to pay due to an accident, disaster​​​​​​​​​​​​ or other extraordinary situation.

• You retired after turning 62 or became disabled during the year that the estimated payments were due.

If you can’t make your estimated tax payments, you should pay what you can to reduce interest and penalties. Try to increase your tax savings so that you can pay off your debt as quickly as possible.

If you still owe more than you can handle when you file your tax return for the year, make sure you file your taxes on time. Penalties for failure to report are more severe than penalties for not paying or underpaying. You can apply for an IRS payment plan, which can extend or allow you to pay your tax bill in installments.

FAQs

Are quarterly IRS payments required?

You are usually required to pay quarterly if you expect to owe at least $1,000 for the tax year after withholding taxes and refundable credits. Because self-employment income is usually not withheld, you usually have to pay taxes quarterly if you are a small business owner or independent contractor. However, if your primary source of income is a W-2 job, you probably don’t need to pay quarterly taxes.

Will I get in trouble if I don’t pay estimated taxes?

You will owe interest and penalties if you do not pay estimated taxes as required, so it is important to set aside money for federal income taxes throughout the year if you have income that should not be withheld.

How do I know if I have to pay estimated taxes?

You generally must pay estimated taxes if you expect your tax bill to exceed $1,000 for the year after deductions and refundable tax credits. If you’re self-employed, do contract work (like freelancing or gig work) or have a lot of income from capital gains, dividends or interest, there’s a good chance you’ll pay estimated tax.