Self-Employed? Avoid a Huge Tax Bill with Estimated Tax Payments!

Chad Dickinson • March 6, 2025

If you’re self-employed or earning income without tax withholding, you could be in for a big surprise at tax time! Without making Estimated Tax Payments (ETPs) throughout the year, you may owe more than expected—plus potential IRS penalties.

The below video explains what Estimated Tax Payments are:

What Are Estimated Tax Payments?

Estimated Tax Payments (ETPs) are quarterly tax payments made to the IRS and state for income that does not have taxes withheld.

These payments apply to income from:

Self-employment (freelancers, business owners, gig workers, etc.
Rental properties
Dividends & interest income
Side hustles & contract work

If you're self-employed, you're responsible for paying both income tax and self-employment tax, which covers Social Security and Medicare.

When Are Estimated Taxes Due?

The IRS requires quarterly estimated tax payments due on these dates:

April 15 – First quarter payment
June 15 – Second quarter payment
September 15 – Third quarter payment
January 15 (following year) – Fourth quarter payment

You can make off-cycle payments anytime to stay ahead of your tax bill.

How to Calculate Your Estimated Tax Payments

To estimate your tax payments, follow these steps:

Calculate your net income (profit) for the quarter
Determine your tax bracket (check last year's tax return for reference)
Add 15.3% for self-employment tax
Multiply your tax rate by your net income to determine your ETP amount
Pay online using the IRS payment portal (recommended for speed and security)

Staying on top of bookkeeping throughout the year helps ensure accuracy in your estimated payments.

Why Estimated Tax Payments Are Important

Avoid IRS penalties – The IRS may charge penalties and interest if you underpay taxes.
No surprise tax bills – Making payments throughout the year prevents a large lump-sum bill at tax time.
Better cash flow management – Spreading tax payments throughout the year helps with financial planning.

How to Make Estimated Tax Payments

The easiest way to pay is online via the IRS Direct Pay system. You can also mail a check or money order, but online payments are faster and more secure.

Dealing with the IRS can be daunting. You don't have to go it alone. Schedule a FREE consultation with us today and our experts can help.

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