Quarterly & Income Tax
Quarterly Estimated Taxes: A Survival Guide for the Self-Employed
Short answer
If you expect to owe more than $1,000 in federal tax for the year, you must pay quarterly estimates on April 15, June 15, September 15, and January 15. Most self-employed people set aside 25–30% of net income to cover federal + self-employment tax.
W-2 employees have taxes withheld automatically. Self-employed people do not — and the IRS expects payment as you earn, not just on April 15. Miss the quarterly deadlines and you owe an underpayment penalty even if you pay in full at year-end.
The four deadlines
| Quarter | Due date (US) |
|---|---|
| Q1 (Jan–Mar) | April 15 |
| Q2 (Apr–May) | June 15 |
| Q3 (Jun–Aug) | September 15 |
| Q4 (Sep–Dec) | January 15 (following year) |
Two ways to calculate
Safe harbor (easiest): pay 100% of last year's tax (110% if AGI was over $150k), divided into four equal payments. As long as you hit this, no penalty — even if you actually owe more.
Current-year estimate: project your net profit, multiply by ~25–30% for federal + SE tax, divide by 4. More accurate but requires tracking through the year.
How to actually pay
- Set up an IRS Direct Pay account (free) or use EFTPS.
- Choose 'Estimated Tax (1040-ES)' and the correct tax year.
- Save the confirmation. Do the same for your state if it has income tax.
- Block 4 calendar reminders for the deadlines — annually.
Frequently asked questions
What percentage should I save?
Most service businesses set aside 25–30% of profit (revenue minus expenses). Higher earners or those in high-tax states should target 35%.
What is self-employment tax?
15.3% on net earnings — covers your Social Security and Medicare. It is on top of federal income tax.
What happens if I miss a quarter?
You owe a small underpayment penalty (currently ~8% annualized on the shortfall). Pay as soon as you can to stop it accruing.
Tax-ready records, automatically.
Glo Invoice tags every expense and 1099 contractor so tax time is a download, not a scramble.
Sources & further reading
Primary sources we consulted when writing and reviewing this guide.