Estimated tax payments: how much and when if you are self-employed

Employees pay their taxes during the year through wage withholding. People who work for themselves, rent out property or receive income without withholding have to do it themselves through estimated payments.

The four dates

A year's estimated payments are due April 15, June 15, September 15 and January 15 of the following year. If the date falls on a weekend or holiday, it moves to the next business day.

How much to pay

You are considered to have paid enough if, between estimates and withholding, you covered 90% of the year's tax or 100% of the prior year's tax. If your prior-year income exceeded $150,000, that second percentage rises to 110%. Basing payments on the prior year is the simplest way not to fall short.

Self-employment tax

In addition to income tax, the self-employed pay self-employment tax, which funds Social Security and Medicare: 15.3% of net earnings, up to the annual Social Security wage base. That is why self-employment income without estimates often ends in a large balance due in April.

How to pay

Through your IRS online account or the federal electronic payment system. Keep the confirmations, because they are reported on the return.

If your income changes

Estimates can be adjusted during the year. If the business grows or slows, recalculate before the September payment.