It can be easy to think taxes are due on April 15th. After all, that’s when returns are required to be filed! However, taxes are actually required to be paid throughout the year rather than on April 15th. Many individuals with wage-earning jobs are not cognizant of this requirement because their taxes are remitted each paycheck with their payroll, a.k.a. “withholding”. Without this periodic withholding with payroll, individuals are required to pay their taxes on a quarterly basis.
These estimated tax payments are quarterly prepayments made to the IRS or state tax which help cover income that isn't subject to withholding, such as self-employment income, interest, dividends, or other types of earnings. These payments can be required, with the possibility of penalties if sufficient amounts are not paid in estimated tax payments.
Payments are generally due April 15th (Q1), June 15th (Q2), September 15th (Q2) and January 15th (Q4). Some states, like California, follow a different schedule, but typically these are the relevant dates.
Here’s a simple example:
A self-employed person earns $100,000 of taxable income. Because they are self-employed, there is no withholding. Their tax due is $20,000. The following year is expected to look the same. They can expect quarterly estimates due each quarter of $5,000, to be paid April 15th, June 15th, Sept. 15th, and January 15th.
Quarterly payments can be made via a number of methods:
Automatic bank debit -This is easiest method, leaving less room for error or forgetfulness. These estimated amounts are prepared with the preparation of the tax return and submitted automatically from your bank on a quarterly basis.
Paper check and paper voucher, through the mail - Generally, these are prepared in advance of the year with the tax return. For example, the 2025 estimates and related vouchers would be prepared with the preparation of the 2024 tax return.
Manually via electronic means - These are not automatically taken from bank accounts but initiated automatically by the taxpayer. A direct bank debit or credit card can be used. Note that most tax authorities will charge a service fee for using a credit card. This method can be accessed online here:
Illinois - https://mytax.illinois.gov/_/
Most other states offer similar platforms on their department of revenue’s website.
Bluestem’s clients receive reminder emails, as missing estimated payments can mean large balances due with the tax return and associated penalties.