Quarterly Estimated Tax
Also known as: estimated tax payments · quarterlies · 1040-ES
Definition
Quarterly estimated tax payments are advance payments of income tax and self-employment tax that US freelancers must make four times per year. Deadlines: April 15, June 15, September 15, and January 15 of the following year.
Detailed Explanation
Unlike employees who have taxes withheld from every paycheck, freelancers must proactively estimate and pay their taxes quarterly. Failing to make estimated payments results in underpayment penalties — typically 3-5% of the underpaid amount. The safe harbor rule: if you pay 100% of last year's tax liability (110% if AGI over $150,000) through estimated payments, you avoid penalties even if you owe more at filing time. To calculate: estimate your annual net profit, multiply by your effective tax rate (income tax + 15.3% SE tax), divide by 4. Each quarter, re-estimate based on actual income. AI bookkeeping tools simplify this by tracking income and expenses in real time — you always know your year-to-date profit and estimated tax liability.
Freelancer Example
A freelancer estimates $80,000 net profit for 2026. Expected tax: $12,000 income tax + $12,240 SE tax = $24,240 total. Quarterly payment: $6,060. They set aside 30% of every client payment in a separate tax savings account and make payments on the four deadline dates.