Estimated Tax Payment

Category: tax

Periodic payments made to the IRS by individuals who do not have enough taxes withheld from their income.

If you have 1099 income (and thus no withholding), you must pay taxes quarterly to the IRS. If you wait until the end of the year to pay everything, the IRS will hit you with interest and underpayment penalties for failing to submit estimated tax payments on time.

Common Examples

• Freelancers must utilize Form 1040-ES to calculate their quarterly estimated tax payment to avoid annual underpayment penalties.
• Because our consulting income is irregular, we automate our estimated tax payment schedule to ensure we stay compliant with IRS norms.