If you're self-employed, freelancing, or earning money from a side hustle, you may owe the IRS four times a year instead of once.
The next estimated tax payment for many filers lands on June 16, which is right around the corner.
Miss it, and the penalty math starts working against you.
Estimated taxes are how the U.S. system collects money from people who don't have an employer withholding taxes from each paycheck.
That includes gig workers, independent contractors, small business owners, and anyone with significant investment or rental income.
If you expect to owe at least $1,000 when you file, the IRS generally wants that money spread across the year.
You pay in four installments, each covering income as you earn it rather than in one lump sum the following April.
The 2025 schedule has deadlines in April, June, September, and January of the next year, so skipping the June date doesn't push everything to the end.
It just means a bigger shortfall later and more penalty exposure.
The IRS charges what amounts to interest on the underpaid amount, calculated per day and based on current rates.
As of recent quarters, that rate has hovered around 7% to 8% annually for individuals.
On a $5,000 shortfall, that can add up to a few hundred dollars over a year, money that buys nothing and fixes nothing.
There's also a safe harbor worth knowing.
If you pay at least 90% of your current year's tax bill or 100% of last year's, whichever is smaller, you generally avoid the penalty.
Higher earners, those with adjusted gross income above $150,000, need to hit 110% of last year's figure instead.
This is why some people simply repeat last year's payment amounts and adjust at filing time.
For anyone who had a surprise tax bill in April, the lesson is to recalculate now, not in December.
Income that jumped this year, a raise, a new client, a brokerage account that paid out gains, all of it changes what you owe.
Waiting until year-end to catch up means those four installments compress into one, and the penalty clock has already been running.
There's a simpler path for people who dislike the guesswork: increase withholding on a regular paycheck.
Withholding is treated as paid evenly throughout the year, even if you ramp it up late, which can erase penalties retroactively.
For married couples, adjusting a W-4 at a salaried job can cover a freelance shortfall without writing quarterly checks at all.
If money is tight, the IRS does offer options.
You can pay online through IRS Direct Pay or the Electronic Federal Tax Payment System, and credit card payments are accepted through third-party processors for a fee.
Setting aside a percentage of each payment as it arrives, say 25% to 30% depending on your bracket, keeps the June, September, and January dates from becoming a crisis.
Estimated taxes reward people who plan and quietly punish people who don't, and the difference is usually just a calendar reminder and a rough spreadsheet.
Check your income trajectory, compare it to last year, and make the June payment before the deadline, not after.
Final Thoughts
Your future self, staring at an April balance due, will thank you.