As you may know, small business owners and self-employed workers often have to pay estimated taxes four times a year. You must pay estimated taxes if you are a sole proprietor, a partner in a partnership, or member of a limited liability company and you expect to owe at least $1,000 in federal tax for the year.
Estimated taxes are due four times per year: April 15, June 15, September 15, and January 15. These tax due dates can shift slightly based on holidays and weekends).
Date What's Due Payment Period April 15 Pay first installment of estimated tax Jan. 1 - March 31 June 15Pay second installment of estimated tax April 1 - May 31 Sept. 15Pay third installment of estimated tax June 1 - Aug. 31 Jan. 15Pay final installment of your previous year estimated taxes Sept. 1 - Dec. 31
How to calculate estimated taxes
If you don't pay enough estimated taxes during the year, the IRS will impose a penalty when you file your annual return (Form 1040). There are three ways to calculate your estimated taxes:
Method How Best for Base on last year's taxes Base estimated taxes on the tax you paid the previous year. No penalty if the amount you pay is equal to 100% of the tax you paid the previous year. People who have confidence their net income will be similar or exceed that of last year. Base It On Taxable Income for Current Year Estimate what your net income will be for the year, divide it into 4 equal payments. No penalty if you pay at least 90% of your tax due for the year People who believe their net income for the year will be less than the previous year. Base It On Quarterly Income Calculate your tax liability at the four quarterly tax deadlines, with prorated deductions. You must file IRS Form 2210 with your tax return People who have income that is unevenly distributed throughout the year, like a Christmas tree salesperson.