When you work for an employer, your taxes are withheld from every paycheck. The government gets paid in real time throughout the year. When you're self-employed, nobody's doing that for you. So the IRS requires self-employed individuals (and anyone else whose withholding is insufficient) to send in estimated tax payments four times a year. It's essentially you doing your own withholding.

If you skip these payments or underpay significantly, the IRS charges an underpayment penalty. As of 2025, that penalty rate is tied to the federal short-term interest rate plus 3 percentage points — currently around 8%. It's not catastrophic, but it's a completely unnecessary expense.

You generally need to make quarterly estimated payments if:

You expect to owe at least $1,000 in federal taxes after withholding and credits, and Your withholding will cover less than 90% of your current year's tax liability, or less than 100% of your prior year's tax liability (110% if your prior year AGI exceeded $150,000) For most solopreneurs, the answer is almost always yes, you need to make these payments. Even if you have a part-time job with some withholding, if your self-employment income is meaningful, you likely need to supplement with estimated payments.

The IRS uses a slightly unconventional "quarterly" schedule that trips people up regularly:

Notice that the "quarters" aren't equal — the second quarter is only two months, while the fourth quarter is four. When these dates fall on a weekend or federal holiday, they shift to the next business day.

Mark these on your calendar now. Missing a due date doesn't mean you can't pay — you can still catch up — but the underpayment penalty accrues from the original due date.

There are two main approaches, and both are valid:

Pay 100% of what you owed in federal taxes last year — divided into four equal installments. If your prior year adjusted gross income exceeded $150,000, you need to pay 110% of last year's liability instead.

This approach eliminates any underpayment penalty even if you end up owing more this year. It's great for solopreneurs whose income fluctuates year to year, because you're not trying to predict an unpredictable number.

Example: If you paid $12,000 in federal taxes last year, you pay $3,000 per quarter this year. That's it. No math required beyond dividing by four.

Estimate your actual income and expenses each quarter and pay 90% of what you'll actually owe. This is better for solopreneurs whose income is growing significantly, because safe harbor based on last year's (lower) income might still leave a meaningful balance due in April.

You'll use IRS Form 2210 to calculate this if you're using annualized income to avoid penalties.

For most people starting out, safe harbor is the cleaner approach. Once your income stabilizes, you can reassess.

The IRS has made this reasonably painless. Your best options:

IRS Direct Pay (free): Go to IRS.gov/payments, choose "Estimated Tax," and pay directly from your bank account. You can schedule payments in advance. No fees.

EFTPS (Electronic Federal Tax Payment System): A free IRS system that lets you schedule payments up to 365 days in advance. Requires a one-time enrollment. Ideal if you want to set and forget your quarterly payments.

IRS2Go App: The IRS's mobile app supports Direct Pay payments for estimated taxes.

Mail a check with Form 1040-ES: Still works, but slow and requires tracking. Use this as a last resort.

Most solopreneurs end up using Direct Pay or EFTPS. Either one gets the job done.

Federal isn't the only game in town. Most states with an income tax have their own quarterly estimated payment requirement using the same general logic. Deadlines typically mirror the federal schedule, though not always exactly.

Check your state's department of revenue website to understand your state's requirements. California, for example, uses a different schedule (Q1 and Q2 are both due in April). Getting tripped up by state deadlines is a real and surprisingly common problem.

If you're operating in a state with no income tax — Florida, Texas, Nevada, Washington, Wyoming, South Dakota, or Alaska — you can ignore this section entirely.

Knowing the rules is one thing. Actually staying on top of four annual payment deadlines, every year, while running a business, is another. Here's a practical framework:

Automate your savings. Every time revenue lands in your account, immediately transfer 25– 30% to a dedicated tax savings account. High-yield savings accounts at places like Marcus, Ally, or Wealthfront Cash work well. You earn a bit of interest, and you keep yourself from accidentally spending money that belongs to the IRS.

Schedule your payments in advance. If you use EFTPS, you can schedule all four payments at the start of the year based on safe harbor amounts. It removes the quarterly decision-making entirely.

Reconcile quarterly. Even if you're using safe harbor payments, review your actual income and projected tax liability each quarter. If your income is significantly higher than expected, consider making a supplemental payment to avoid a large April bill.

Use bookkeeping software. Tools like QuickBooks Self-Employed, FreshBooks, or Wave can estimate your quarterly tax liability in real time based on your tracked income and expenses. It's not a substitute for professional advice, but it's a useful sanity check.

This happens. A slow quarter, an unexpected expense — sometimes the payment is due and the money isn't there. A few things to keep in mind:

Pay what you can. Partial payments reduce the penalty balance. Paying nothing has no advantage over paying something.

After the year is over and your return is filed, if you have a balance due, you can apply for a payment plan (installment agreement) through the IRS. This doesn't eliminate interest, but it gives you breathing room.

Don't make the mistake of compounding the problem by skipping future quarters too. Each missed quarter accrues its own penalty.

Quarterly estimated taxes aren't just an IRS formality — they're a core part of managing your finances as a solopreneur. Treat them like a recurring bill. Set aside the money, schedule the payments, and stop dreading April. The solopreneurs who get this right aren't the ones who earn the most — they're the ones who built a simple, consistent system and stuck to it.

Start today: Calculate your safe harbor amount based on last year's return, divide by four, and schedule your next payment through IRS Direct Pay. Thirty minutes now saves you hundreds in penalties — and a lot of stress.

Accurate quarterlies start with accurate books — see bookkeeping for solopreneurs — and a clear picture of what you can deduct. If most of your income is 1099 work, understand those forms so your estimates match what clients report.