Who Needs to Make Quarterly Tax Payments
If you're a W-2 employee with no other income, your employer handles this. Otherwise, you're required to make quarterly estimated payments if:
- You expect to owe at least $1,000 in federal taxes
- Your withholding won't cover 90% of current year tax or 100% of last year's tax
This applies to freelancers, contractors, business owners, and investors with significant dividends or capital gains.
The IRS assessed $1.8 billion in underpayment penalties in 2022. The penalty rate reached 8% annualized as of 2024. Source: IRS Data Book 2022 — Source
The Two Calculation Methods
Method 1: Safe Harbor (easiest) — Pay 100% of last year's total tax in four equal installments. (110% if prior year AGI > $150,000.) No penalty regardless of what you actually owe.
Method 2: 90% of Current Year — Estimate current year tax and pay 90% in four installments. Better if income is significantly lower than last year.
Freelancers represent the fastest-growing segment of underpayment penalty assessments. Source: TIGTA Report 2023-40-033 — Source
2024 Due Dates
| Quarter | Income | Due Date |
|---|---|---|
| Q1 | Jan 1–Mar 31 | April 15, 2024 |
| Q2 | Apr 1–May 31 | June 17, 2024 |
| Q3 | Jun 1–Aug 31 | September 16, 2024 |
| Q4 | Sep 1–Dec 31 | January 15, 2025 |
Pay via IRS Direct Pay at IRS.gov/payments — free, no signup required.
See also: self-employment tax calculator and the tax estimator guide.
Get Started with Avenue — it tracks income by quarter and calculates your estimated payment for each period.