Quarterly tax payments are due four times a year. As the IRS explains, a year has four payment periods with the following quarterly payment due dates: April 15, June 15, Sept. 15 and Jan. 15.
Quarterly pay periods are the least frequent type. With quarterly pay periods, employees receive their wages once every three months. This is usually done to align with specific business needs or to accommodate the payment of commission-based wages.
For estimated tax purposes, the year is divided into four payment periods. Each period has a specific payment due date. If you don't pay enough tax by the due date of each of the payment periods, you may be charged a penalty even if you are due a refund when you file your income tax return.
Typically, freelancers, those who are self-employed, businesses, and some investors have to pay quarterly taxes. W-2 workers whose tax liability is not fully covered by their withholdings may also need to pay estimated taxes. In 2025, estimated tax payments are due April 15, June 16, and Sept. 15.
Quarterly pay is a payment structure that allows a company to process payments four times per year. This means that employees receive payment once every three months. Other types of payment structures include weekly, biweekly, semi-monthly, and monthly.
Quarterly billing is a payment cycle in which bills are issued every three months, resulting in four billing periods per year. This system is commonly used by businesses that provide ongoing services or products, allowing customers to pay for their usage or subscription every quarter.
Yes. You're responsible for paying estimated quarterly taxes even if it's your first year in business or as a freelancer. Because you won't have your previous year's tax return to guide you, the annualized method for estimating will probably be best.
Here's a general rule-of-thumb from the IRS for determining if you should be paying taxes quarterly: If you expect to owe more than $1,000 in taxes for the year for your freelance or contracting work (which amounts to around $3,000 or more in profit) then you may need to pay quarterly taxes.
To calculate your estimated taxes, you will add up your total tax liability for the current year—including self-employment tax, individual income tax, and any other taxes—and divide that number by four.
The typical bonus amount can range from 1% to 15% of an employee's salary, usually depending on a number of factors such as industry, company performance, and individual or team accomplishments.
Most people work for an employer, and have their tax withheld from their paycheck. This isn't the case for self-employed people, who are responsible for calculating, filing, and paying their own taxes. Therefore, if you're self-employed, you'll need to pay quarterly taxes.
Nevertheless, independent contractors are usually responsible for paying the Self-Employment Tax and income tax. With that in mind, it's best practice to save about 25–30% of your self-employed income to pay for taxes. And, remember, the more deductions you find, the less you'll have to pay.
If you didn't pay enough tax throughout the year, either through withholding or by making estimated tax payments, you may have to pay a penalty for underpayment of estimated tax.
There is no minimum income you have to meet before your small corporation is taxed. Every dollar it earns (after deductions and credits are factored in) will be taxed at 21%. Corporate tax rates also apply to limited liability companies (LLCs) who have elected to be taxed as corporations.
If you don't pay your tax by the due date in the notice or letter we send to you, the failure to pay penalty is 0.5% of the tax you didn't pay timely for each month or partial month that you don't pay after the due date.
Paying Taxes as an Independent Contractor
You'll need to file a tax return with the IRS if your net earnings from self-employment are $400 or more. Along with your Form 1040, you'll file a Schedule C to calculate your net income or loss for your business.
The rule is that you must pay your taxes as you go throughout the year through withholding or making estimated tax payments. If at filing time, you have not paid enough income taxes through withholding or quarterly estimated payments, you may have to pay a penalty for underpayment.
As a result, it is recommended that as an independent contractor, you should save somewhere around 25%-30% of your earnings to pay your taxes.
That “30% rule of thumb” comes from the fact that self-employment income is taxed at an additional 15.3% to make sure that self-employed people still pay Medicare and Social Security tax.
Answer: Generally, you must make estimated tax payments for the current tax year if both of the following apply: You expect to owe at least $1,000 in tax for the current tax year after subtracting your withholding and refundable credits.
If you want to avoid a tax bill, check your withholding often and adjust it when your situation changes. Changes in your life, such as marriage, divorce, working a second job, running a side business, or receiving any other income without withholding can affect the amount of tax you owe.
Estimated tax payment safe harbor details
The IRS will not charge you an underpayment penalty if: You pay at least 90% of the tax you owe for the current year, or 100% of the tax you owed for the previous tax year, or. You owe less than $1,000 in tax after subtracting withholdings and credits.