When you're self-employed, no one withholds taxes from your paycheck — because there is no paycheck. That means you're responsible for paying taxes four times a year. Miss these payments and you'll face underpayment penalties on top of a large April bill. Here's everything you need to know.
Who Needs to Pay Estimated Taxes?
You're required to pay estimated taxes if you expect to owe at least $1,000 in federal taxes after subtracting withholding and credits. This applies to: self-employed individuals, freelancers, independent contractors, business owners, and anyone with significant investment income, rental income, or other income without withholding.
The 2026 Due Dates
- Q1 (Jan 1 – Mar 31): Due April 15, 2026
- Q2 (Apr 1 – May 31): Due June 16, 2026
- Q3 (Jun 1 – Aug 31): Due September 15, 2026
- Q4 (Sep 1 – Dec 31): Due January 15, 2027
Pro Tip
Note that Q2 covers only 2 months (April-May), not 3. This trips up a lot of people. Mark all four dates in your calendar now.
How to Calculate What You Owe
Method 1: Safe Harbor (Easiest)
Pay 100% of last year's tax liability (110% if your AGI exceeded $150,000). This eliminates underpayment penalties regardless of what you actually owe. It's the safest approach if your income is unpredictable.
Method 2: 90% of Current Year Tax
Estimate your current year income and calculate 90% of the expected tax. This is more accurate but requires projecting your income throughout the year. Best for businesses with relatively stable income.
How to Pay
The easiest method is IRS Direct Pay at irs.gov/payments — free, instant, and no account required. You can also use EFTPS (Electronic Federal Tax Payment System) for scheduled payments, or mail a check with Form 1040-ES. Most states have their own estimated tax requirements — check your state's revenue department website.
The Penalty for Underpayment
The underpayment penalty is calculated at the federal short-term rate plus 3% (currently around 8% annualized). It's not catastrophic, but it adds up. More importantly, underpayment often means a large surprise bill in April that disrupts cash flow.
Pro tip: Set aside 25-30% of every payment you receive into a separate savings account designated for taxes. When estimated tax time comes, the money is already there. This single habit eliminates most tax-related financial stress.
Related Resource
Questions about quarterly taxes, self-employment deductions, or filing as a freelancer?
Our Tax Preparation FAQ covers how to report self-employment income, what deductions you can take, how refunds work, and what documents you need to file.
Estimated taxes aren't a burden — they're just the self-employed version of withholding. Once you build the habit of setting money aside, it becomes second nature.
Tiffany Nellums, EA
Tiffany Nellums, EA
Tiffany is an IRS Licensed Enrolled Agent and NAEA member with over 10 years of experience helping business owners, real estate investors, and high-income earners reduce their tax burden through proactive planning and strategic structuring.