The median net worth of self-employed people is over four times higher than that of traditional wage-earners in the workforce, according to JP Morgan Chase & Co. That’s likely one reason roughly 16 million people are self-employed today, taking on the responsibility (and reward) of running their own businesses. But working for yourself also comes with a responsibility most employees don’t have to think about: making estimated tax payments.
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Key takeaways
- Estimated tax payments are quarterly payments made on income that is not subject to withholding, such as self-employment or business income.
- The IRS generally expects you to make estimated payments if you expect to owe $1,000 or more in taxes.
- Form 1040-ES helps calculate your estimated tax liability, including income tax and self-employment tax.
- The IRS charges underpayment penalties as interest on late or short payments, so the cost depends on the amount and how long it went unpaid.
As a self-employed individual, you don’t have an employer withholding taxes during the payroll process to cover your share of programs like Medicare and Social Security. That task falls to you, so understanding what estimated payments (also called quarterly payments) are and paying them on the IRS’s schedule can help you avoid an unwelcome lump sum at tax time.
Let’s find out more about estimated tax payments, calculating them, and how to pay them to avoid penalties.
What is an estimated tax payment?
In the simplest terms, an estimated tax payment is the amount of taxes you estimate you’ll owe for the current tax year, paid on income that isn’t subject to withholding. While you can pay your full estimated liability in one payment, many self-employed business owners divide it into four equal payments made throughout the year instead.
You can choose to pay all at once or spread payments out, but either way, your payments need to land by the IRS’s scheduled due dates, which we’ll cover later in this article. You can’t simply choose your own payment date.
What is Form 1040-ES?
Form 1040-ES is the IRS form used to calculate and submit quarterly estimated tax payments. It includes worksheets to help you estimate your income, deductions, credits, and self-employment taxes for the year. While the form contains payment vouchers for those paying by mail, you can also use it purely as a calculation tool if you pay online.
Estimated tax payments: who pays them?
If you’re a self-employed individual, a sole proprietor, a partner, an LLC member, or an S Corporation shareholder, and you expect to owe $1,000 or more in federal income taxes, you must make estimated tax payments. These payments cover the tax you owe on income that isn’t subject to withholding. The requirement applies to US citizens, including residents of Puerto Rico, Guam, American Samoa, the US Virgin Islands, and the Commonwealth of the Northern Mariana Islands.
The good news is that the IRS provides resources to make it a fairly straightforward process.
Who needs to pay?
- The threshold: You must make estimated payments if you are self-employed, a sole proprietor, a partner, an LLC member, or an S Corp shareholder expecting to owe $1,000 or more in federal income taxes.
- The purpose: These payments cover the tax you owe on income that isn’t subject to standard employer withholding.
How to calculate your tax
- The worksheets: Use the calculation tools built into Form 1040-ES to estimate your expected gross income, deductions, and credits.
- Self-employment tax: The form includes a specific worksheet to help you calculate your self-employment tax and includes current tax rate schedules.
When are payments due?
- The schedule: You can pay all at once or divide your liability into four equal payments due on April 15, June 15, September 15, and January 15.
- Weekend rules: If any of those standard dates fall on a weekend or a holiday, the deadline shifts to the next business day.
Penalties and Safe Harbor
- Late fees: The IRS charges interest on underpaid amounts for each day an installment stays unpaid.
- Safe Harbor rule: You can completely avoid penalties by paying 90% of your current year’s total tax or 100% of your prior year’s total tax.
What is a tax payment worksheet?
A tax payment worksheet is a calculation tool built into IRS Form 1040-ES. It helps you estimate your expected gross income, deductions, credits, and self-employment tax for the year. Once you work through the worksheet, you’ll have your total estimated tax liability, which you can divide into four equal quarterly payments
How do you calculate estimated tax payments?
You can use Form 1040-ES, Estimated Tax for Individuals, to estimate yearly income and calculate your quarterly payments. The form includes an Estimated Tax Worksheet on page 12 that asks you to enter your estimated gross income, any deductions and credits you plan to take, and any other taxes you expect to owe.
Here’s what the worksheet looks like:
The form also includes a Self-Employment Tax Worksheet on page nine, so you can calculate the self-employment tax you’ll owe and include it in your estimated payments.
Also included in Form 1040-ES is a Tax Rate Schedule, on page seven, which allows you to calculate your estimated taxes owed using the rate table.
If you’re not sure of your obligations, reach out to your bookkeeper or a qualified tax professional to run the numbers with you.
How do you pay estimated taxes online with Form 1040-ES?
Form 1040-ES includes payment vouchers, but you only need those if you pay by check or money order. You can still use the form to calculate what you owe, but you don’t need the vouchers if you pay your taxes online.
Other ways to pay include IRS Direct Pay, phone payment through an IRS-approved processor, or the Electronic Federal Tax Payment System (EFTPS). You can also pay by credit or debit card, though a convenience fee applies. The IRS2go mobile app links you to these same payment options from your phone.
When are estimated tax payments due in 2026?
Payment due dates can change slightly each year, but you can generally count on the 15th of April, June, September, and January of the following year. If any of those dates fall on a weekend or holiday, the deadline shifts to the next business day.
The first payment for the 2026 tax year was due April 15, 2026. If you missed that deadline, it’s best to make your payment as soon as possible to minimize IRS penalties.
Here’s the full 2026 schedule:
| Estimated tax payment due date: | Income earned during the period of: |
| Monday, April 15, 2026 | January 1 — March 31 |
| Monday, June 15, 2026 | April 1 — May 31 |
| Monday, September 15, 2026 | June 1 — August 31 |
| Friday, January, 2027* | September 1 — December 31 |
You can pay your entire estimated tax bill by the first due date, or split it into four equal payments that land on each date above. If you have employees, this schedule is separate from your payroll tax deadlines. Payroll tax deposits and filings follow their own due dates, and we didn’t include them in the table above.
If you’re unsure how to plan around these deadlines, your bookkeeper or a qualified tax professional can help you stay on track.
What are the penalties when you miss a quarterly estimated tax payment?
The IRS doesn’t charge a flat fee for missing or shorting a quarterly payment. Instead, it charges interest on the underpaid amount for each day it stays unpaid, calculated on Form 2210. The IRS sets interest rates every quarter, and it applies separately to each installment, so a shortfall from your April payment can rack up interest for months before you catch up, even if you pay your tax bill in full by the filing deadline.
For example, say your required payment each quarter is $2,000, and you miss the April 15 installment entirely, paying it instead when you file the following April. At a 7% annual rate, that $2,000 accrues roughly $140 in penalty interest, just for that one missed quarter.
Shortfalls in later quarters cost less, since they have less time to accrue interest before you file.
How to avoid the penalty with safe harbor
The good news is you can sidestep complicated estimated tax calculations and penalties entirely using the IRS’s safe harbor rule. You won’t owe an underpayment penalty as long as you pay the smaller of:
- 90% of your current year’s total tax, or
- 100 of your prior year’s total tax (110% if your prior year’s adjusted gross income was more than $150,000)
This safe harbor is helpful if your income fluctuates, which is common for self-employed business owners.
For example, say last year you owed $8,000 in total tax and this year you expect to owe $12,000 because business picked up. Your safe harbor is the smaller of 90% of $12,000 ($10,800) or 100% of $8,000 ($8,000). Since $8,000 is smaller, you can pay $2,000 per quarter, based entirely on last year’s numbers, and avoid a penalty completely, even though you’ll owe an additional $4,000 when you file. You just need to have that extra amount ready to pay by the filing deadline.
If you can’t meet your tax obligation, or need options for paying what you owe, you can apply for a payment plan through the IRS.
Bottom line: It pays to understand estimated tax payments
Estimated taxes can feel like one more thing on a long list when you’re running a business, but knowing when payments are due and paying them on time means one less thing to worry about at tax time. And if you’re also responsible for paying employees, modern payroll software can help keep that side of your compliance on track. If you have any questions, our team is here to help!
Please note all material in this article is for educational purposes only and does not constitute tax or legal advice. You should always contact a qualified tax, legal or financial professional, in your area for comprehensive tax or legal advice.
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Jon Davis is the Sr. Content Marketing Manager at OnPay. He has over 15 years of experience writing for small and growing businesses. Jon lives and works in Atlanta.