The five steps
- Step 1: Decide whether you owe them. If withholding won't cover this year's tax minus $1,000, you owe estimates — freelancers, landlords, business owners, and retirees with investment income nearly always do. Employees with one W-2 usually don't.
- Step 2: Pick a safe harbor and pay to it. 90% of this year's tax, 100% of last year's (110% at higher incomes), or owe under $1,000 at filing. The prior-year harbor is the autopilot: divide last year's total tax by four and pay it.
- Step 3: Hit all four deadlines. April 15, June 15, September 15, January 15 — uneven quarters the IRS will not round for you. Miss one and the penalty accrues from that date even if a later payment covers the year.
- Step 4: Pay electronically and keep proof. IRS Direct Pay or EFTPS, applied to the right year and quarter. Mailed vouchers get misapplied every filing season; electronic payments leave a timestamp the IRS cannot dispute.
- Step 5: True up in January, not April. Run the real numbers after year-end and top up with the January payment — or bump December withholding, which the IRS treats as paid evenly all year. April is for filing, not for catching up.
What can go wrong
The per-quarter computation is the trap: a taxpayer who pays the full year's tax in January still owes §6654 on the three missed quarters. The second trap is the 110% tier — prior-year AGI above the threshold silently raises the autopilot harbor, and last year's divided-by-four payment quietly underpays. The third is misapplied payments: wrong year, wrong quarter, or a spouse's Social Security number on the voucher. Electronic payment with a saved confirmation ends all three failure modes at once.
Frequently Asked Questions
- April 15, June 15, September 15, and January 15 of the next year — shifting to the next business day when they fall on weekends or holidays. The quarters are uneven by statute.
- IRC §6654 charges interest on each quarterly shortfall from its due date — currently the federal rate plus three points. It is computed per quarter, so one missed deadline bills you even in an overpaid year.
- Meet any safe harbor: 90% of current-year tax, 100% of prior-year tax (110% once prior-year AGI crosses the higher-income threshold), or owe less than $1,000 with the return.
- Yes — and it is often the better move. Withholding counts as paid evenly throughout the year no matter when withheld, so a December W-4 adjustment can retroactively cover missed quarters.