Quarterly estimated taxes, explained
When you're self-employed, no employer withholds taxes from your pay — so the IRS expects you to pay as you go, in four estimated installments through the year. Skipping them can mean an underpayment penalty.
Who has to pay
Generally, if you expect to owe $1,000 or more in tax for the year after withholding, you're expected to make quarterly estimated payments. That covers most freelancers, contractors, and profitable LLC owners.
When they're due
The four federal deadlines usually fall in mid-April, mid-June, mid-September, and mid-January of the following year. Dates shift slightly year to year, so confirm the current year's schedule.
How to estimate what you owe
Estimate your net profit, then account for both self-employment tax (Social Security and Medicare, roughly 15.3% on net earnings) and income tax at your bracket. A common shortcut is to set aside 25–30% of net profit for taxes, then true it up quarterly.
Keeping your books current makes this painless: if you always know your year-to-date profit, you can size each payment accurately instead of guessing.
Frequently asked questions
What happens if I don't pay quarterly taxes?
You may owe an underpayment penalty plus interest, even if you pay the full amount at tax time. Paying the required installments through the year avoids it.
How much should I set aside for taxes?
A common rule of thumb is 25–30% of your net profit, but the right number depends on your total income and tax bracket. Tracking year-to-date profit lets you calculate it more precisely.
Do LLC owners pay estimated taxes?
Owners of profitable single-member LLCs generally do, since LLC profit flows to their personal return without withholding. The LLC itself typically doesn't pay the tax — the owner does.
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Start freeThis guide is general information, not tax or legal advice. Consult a qualified professional about your situation.