The quarterly federal estimated tax payments is what most freelancers and independent contractors make to pay taxes. The Internal Revenue Service requires taxpayers who earn income that isn’t subject to income tax withholding to make federal estimated tax payments.
The quarterly taxes are paid for each quarter, meaning that you will make 4 payments for each tax year. The way that you pay quarterly federal estimated tax payments is simple. Just like any other tax payment method, you can pay taxes using a credit card, bank account, or pay taxes on the EFTPS.
The Electronic Federal Tax Payment System (EFTPS) might be a better option if you solely earn income that isn’t subject to withholding. This is because this will help you see your previous payments for up to 18 months and see your previous payments. This will help you compare the total taxes paid with your anticipated tax liability.
Regardless of how you pay quarterly federal estimated taxes though, you must pay them by the following deadlines for each quarter.
|1st Quarter||April 15|
|2nd Quarter||June 15|
|3rd Quarter||September 15|
|4th Quarter||January 15*|
*The last quarter of the tax year’s estimated tax payments are due on January 15, the following year. For example, for the last quarter of 2021’s estimated payments are due on January 15, 2022.
To estimate tax payments, you will need to fill out Form 1040-ES. This is the only way you will get an accurate estimate of the taxes owed for the quarter.
Take note that just like withholding, you are going to be subject to underpayment penalties if you pay less than 90 percent of your tax liability for the tax year. The best way to avoid these penalties is to pay slightly more than what you estimated.