If you started driving for a delivery app, selling crafts online, or picking up contract work this year, there is a good chance nobody is withholding money from your checks.
That means the tax bill you owe in April could be far bigger than you expect, and the IRS may add a penalty on top of it.
The IRS charges interest on underpayments, and the rate has been running around 7% to 8% in recent quarters.
On a $6,000 shortfall, that can quietly add a few hundred dollars to what you owe.
The fix is called an estimated tax payment, and the next deadline is September 15.
Anyone who expects to owe at least $1,000 for the year generally needs to pay quarterly, whether they are self-employed, a gig worker, or earning income from rentals, investments, or a side hustle.
The IRS takes payments through its Direct Pay tool, which pulls straight from a bank account with no fee.
You can also pay by debit or credit card through a processor, though cards usually add a convenience fee of roughly 2% to 2.5%.
That fee can be worth it if you are chasing a credit card sign-up bonus or cash back, but it eats into your payment otherwise.
Figuring out the amount does not require an accountant.
If you made $30,000 in freelance income and expect to owe around 15% after deductions, that is about $4,500 for the year.
Divide by four and send roughly $1,125 each quarter.
If your income is uneven, you can use the annualized method and pay more in your bigger months.
One detail trips up a lot of first-timers: the deadlines are not evenly spaced.
Payments are due in April, June, September, and January.
The June date catches people who assume quarterly means every three months.
There is also a safe harbor that can protect you from the penalty entirely.
If you pay at least 90% of what you owe this year, or 100% of what you owed last year, you are generally covered.
That second rule is a lifesaver when your income jumps and you cannot predict the final number.
Mark your calendar now, set aside a percentage of every payment you receive, and consider opening a separate savings account just for taxes.
It stings less in April when the money is already sitting there.
The people who get burned are rarely the ones who owe the most.
Final Thoughts
They are the ones who earned a little extra on the side, assumed it was no big deal, and found out in April that the IRS had been counting all along.