The short answer: if you earn income that isn’t having taxes withheld — like self-employment, freelance, or investment income — the IRS likely expects you to pay taxes four times a year, not just in April.

Who this affects

If any of these sound like you, quarterly estimated payments probably apply:

• You’re self-employed or a 1099 contractor
• You own a small business or are a partner in one
• You have significant income from investments, rental property, or side work
• You expect to owe $1,000 or more when you file

How it works

The U.S. tax system is “pay as you go.” Employees have taxes withheld from every paycheck automatically. But if you earn income without withholding, that responsibility shifts to you — paid in four installments across the year. The payments are due in April, June, September, and January.

Miss them, and you can face an underpayment penalty even if you pay your full balance in April.

What to do next

A common approach is to set aside a percentage of every payment you receive — many people start around 25-30% — and pay it quarterly. But the right number depends on your total income, deductions, and situation, and getting it wrong in either direction costs you.

If you’re not sure whether this applies to you or how much to set aside, contact us, a quick review now can save you a penalty later.

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This post is provided for general informational purposes only and does not constitute individualized tax advice. Please consult us regarding your specific situation.