Your estimated taxes are due in 2 days. Here’s how to pay

If you’ve been working as a gig worker or freelancer this year and haven’t paid taxes on the money you earned, listen up. An important IRS deadline is approaching. You have until midnight on Sept. 16 to pay estimated taxes on any untaxed income you earned from June through the end of August. If you missed the previous two estimated tax deadlines in April and June, paying by Monday could help you avoid further IRS self-employment penalties or interest when you file your taxes next year.

Income you earn from self-employment, side jobs, freelance work, or your own business may not have taxes automatically withheld. If that’s the case for you, it’s a smart move to make estimated tax payments four times a year. You also need to make these payments if you have other non-withholdable income, such as interest, dividends, capital gains, alimony, cryptocurrency, or rental income.

The process of filing an estimated tax return can be complicated, but we’re here to simplify it for you. Here’s everything you need to know to calculate your taxes and file them on time.

Read more: Don’t Ignore Your Tax Bill. Instead, Do This

What are estimated taxes?

If you earn or receive income that isn’t subject to federal withholding taxes throughout the year—such as income from a side job or rental income—you’ll pay estimated taxes as you go. An estimated tax is a quarterly payment based on your income for a given period. Essentially, estimated taxes allow you to pay a portion of your income taxes up front every few months to avoid paying a lump sum when your taxes are due.

When are estimated taxes due?

Estimated taxes are due quarterly, usually on April 15, June, September, and January of the following year. One notable exception is when the 15th falls on a holiday or weekend. In those cases, you must file your return by the next business day.

The deadlines for filing your 2024 estimated taxes are listed below.

Estimated tax deadlines

Earning period	Taxes due
From January 1 to March 31, 2024	April 15, 2024
From April 1 to May 31, 2024	June 17, 2024
From June 1 to August 31, 2024	September 16, 2024
From September 1 to December 31, 2024	January 15, 2025

Who has to pay estimated taxes?

If you have filled out an IRS W-4 form, which instructs your employer on how much to withhold from each paycheck, you may not have to pay estimated taxes. If you are not a W-4 employee, you probably need to keep estimated tax payments on your radar. According to the IRS, you generally need to make estimated tax payments if you expect to owe $1,000 or more in taxes when you file your tax return and your employment type falls into one of these categories:

• Independent contractor or freelancer
• Sole proprietor
• Partner
• Shareholder of company S

Other sources of income subject to estimated tax include:

• Dividends and interest earned from the sale of investments
• Royalties for past work
• Rental income for the owner
• Maintenance
• Unemployment benefit
• Retirement benefits
• Social Security benefits if you have other sources of income
• Awards and distinctions

You may also have to pay estimated taxes as a full-time employee if your employer doesn’t withhold enough from your paycheck. To update your W-4 with the correct withholding amount, use the IRS Tax Withholding Estimator, complete a new Form W-4, Employee’s Withholding Allowance Certificate, and send it to your employer.

Estimated taxes are due regardless of whether payment is made by direct deposit, check, or digital payment services such as PayPal, CashApp, Zelle, or Venmo. Note: While should If you already pay taxes on that income, a new rule under the American Rescue Plan requires third-party payment networks to report payments of $600 or more to the IRS.

How do I calculate estimated taxes?

There are several ways to calculate your quarterly tax payments, depending on your business model and annual revenue.

• If you have a fixed income, estimate the tax you’ll owe for the year and send a quarter to the IRS each quarter. You’ll also need to factor in self-employment taxes.

• If your income changes throughout the year, you can estimate your tax burden based on your income and deductions from the previous quarter. The IRS Estimated Tax Worksheet can help you do the math.

If you overestimated your earnings at the end of the year, you can file Form 1040-ES to get a refund or to apply the overpayment against future quarterly taxes. If you underpaid your taxes, the form can help you figure how much you still owe.

How do I pay estimated taxes?

When filing estimated taxes, use IRS tax form 1040-ES or form 1120-W if you file as a corporation. You can fill out the form by hand using the included spreadsheets, or you can rely on your favorite tax software or a tax professional to guide you through the process and get the job done. From there, you can pay your federal taxes by mail or online through the IRS website. You’ll also find a full list of accepted payment methods and options, including installment plans.

Do I also have to pay estimated state taxes?

It depends. If you live in one of the few U.S. states that doesn’t have an income tax, your liability ends with estimated federal taxes, which we’ve discussed. If your state collects income taxes, you’ll make estimated tax payments on the same due dates as you do for federal taxes. Visit your state’s Department of the Treasury website or consult your tax advisor or tax software service for more personalized information.

What happens if I don’t pay my estimated taxes?

It’s a good idea to put a reminder on your calendar when your quarterly due date approaches to avoid paying a late fee. You may be charged a late fee if:

• After deductions and credits, your tax debt is more than $1,000.
• You paid less than 90% of your current year’s taxes in estimated taxes.

In some situations, the penalty may be waived. If you want to dive deeper into estimated tax penalties and waiver requirements, see the IRS Underpayments Guide for instructions.

Can I avoid paying estimated taxes?

Probably not without incurring these penalties. Certain classes of workers are exempt from having to make quarterly payments to Uncle Sam, particularly those whose income is exceptionally modest or one to which the following conditions apply:

• If your net income for the quarter was $400 or less, you don’t have to pay estimated taxes; however, you still have to file a tax return even if you don’t have to pay any taxes.
• If you were a U.S. citizen or resident for all of last year, your total tax was zero AND you didn’t have to file a tax return.
• If your income fluctuates dramatically throughout the year (for example, if you run a seasonal business), you may be able to reduce or eliminate your estimated tax payments by using the annual income installment method. Review IRS Worksheet 2-7 to see if you qualify.

For more tax advice for the self-employed, read our page tax form 1099-K explained and check it out best business owner advice to prepare to pay taxes for your side business.