How do I avoid the underpayment penalty?

Pay at least 90% of your current year's tax or 100% of your prior year's tax (110% if your prior year AGI exceeded $150,000). Meeting either threshold through a combination of withholding and estimated payments avoids the penalty.

Can I make estimated tax payments online?

Yes. The IRS offers several online payment options including IRS Direct Pay (free, from your bank account), EFTPS (Electronic Federal Tax Payment System), and credit/debit card payments (processing fee applies).

What if I overpay my estimated taxes?

Overpayments are applied as a credit when you file your Form 1040. You can choose to receive a refund or apply the overpayment to the following year's estimated tax.

Do I need to make state estimated tax payments too?

If your state has an income tax, you may also need to make state estimated tax payments. Check your state's requirements — deadlines and rules vary by state.

Tax Returns

Form 1040-ES: Estimated Tax for Individuals

Used to calculate and pay estimated taxes on income not subject to withholding, such as self-employment income, interest, dividends, and rental income.

Download Form 1040-ES PDF About on IRS.gov

Overview

Form 1040-ES, Estimated Tax for Individuals, is used to calculate and pay estimated federal income taxes on a quarterly basis. This form is primarily used by self-employed individuals, freelancers, investors, and others who receive income without tax withholding.

The U.S. tax system operates on a pay-as-you-go basis, meaning you are expected to pay taxes throughout the year as you earn income. For employees, this is handled through payroll withholding. For self-employed individuals and those with significant non-wage income, quarterly estimated tax payments serve the same purpose.

Estimated tax payments cover not only federal income tax but also self-employment tax (Social Security and Medicare) and any other taxes reported on Form 1040. Failure to make adequate estimated payments can result in an underpayment penalty, even if you pay the full amount when you file your return.

Who Files This Form?

You are generally required to make estimated tax payments if you expect to owe $1,000 or more in tax after subtracting withholding and refundable credits. This commonly applies to self-employed individuals, freelancers, gig workers, landlords with rental income, investors with significant capital gains or dividends, and retirees with income not subject to withholding.

You can avoid the estimated tax penalty by paying at least 90% of the current year's tax liability or 100% of the prior year's tax liability (110% if your AGI exceeded $150,000), whichever is smaller. If you are an employee, you may be able to avoid estimated payments by increasing your W-4 withholding instead.

Key Fields

Estimated Tax Worksheet, Line 1: Adjusted gross income

Your expected AGI for the year based on projected income from all sources.

Estimated Tax Worksheet, Line 4: Deductions

Your expected deductions — either the standard deduction or projected itemized deductions.

Estimated Tax Worksheet, Line 9: Self-employment tax

If you are self-employed, this includes the 15.3% self-employment tax (Social Security and Medicare) on your net earnings.

Estimated Tax Worksheet, Line 12: Credits

Any tax credits you expect to claim, such as child tax credit or education credits.

Estimated Tax Worksheet, Line 14a: Total estimated tax

Your total expected tax liability for the year.

Payment Vouchers 1-4

Four payment vouchers for quarterly payments due April 15, June 15, September 15, and January 15 of the following year.

Filing Deadlines

Due Date

April 15, June 15, September 15, January 15

Late Filing Penalty

Underpayment penalty calculated on Form 2210 if estimated tax payments are insufficient.

Step-by-Step Instructions

1
Estimate your expected adjusted gross income for the year, including self-employment income, investments, and other sources.
2
Subtract your expected deductions (standard or itemized) and calculate your estimated taxable income.
3
Calculate your expected tax using the current year's tax brackets.
4
Add self-employment tax if applicable (15.3% on the first $168,600 of net earnings for 2024, plus 2.9% Medicare on all earnings).
5
Subtract expected credits and any withholding from W-2 or other sources.
6
Divide the remaining estimated tax by 4 to determine your quarterly payment amount.
7
Make payments by the quarterly deadlines: April 15, June 15, September 15, and January 15.
8
Pay using IRS Direct Pay, EFTPS, credit/debit card, or mail a check with the 1040-ES payment voucher.

Common Mistakes to Avoid

Missing quarterly payment deadlines

Mark the deadlines on your calendar: April 15, June 15, September 15, and January 15. Late payments incur penalties, even if your annual return is filed on time.

Underestimating income

If your income varies, recalculate each quarter. You can use the annualized income installment method on Form 2210 if income is uneven throughout the year.

Forgetting to include self-employment tax

Self-employment tax (15.3%) is in addition to income tax. Many first-time freelancers are surprised by this additional obligation.

Not adjusting payments when circumstances change

If you get a new job, lose a client, or have a major income change, recalculate your estimated tax for remaining quarters.

Using the wrong year's form

Tax rates and thresholds change annually. Always use the current year's Form 1040-ES to ensure accurate calculations.

Frequently Asked Questions

Quarterly payments are due April 15, June 15, September 15, and January 15 of the following year. If the due date falls on a weekend or holiday, the deadline moves to the next business day.

Related Forms

Form 1040

U.S. Individual Income Tax Return

Schedule C

Profit or Loss from Business (Sole Proprietorship)

Schedule SE

Self-Employment Tax

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