"Master Quarterly Taxes: A Simple Guide"

Quarterly estimated taxes are periodic payments required by individuals with income not subject to withholding, such as self-employment or investment income, to avoid underpayment penalties. To calculate these taxes, estimate annual income, subtract deductions, apply tax rates, and divide the total liability into four payments due on specific dates.


Understanding Quarterly Estimated Taxes

Quarterly estimated taxes are payments made four times a year to the IRS and state tax agencies by individuals who earn income that isn’t subject to tax withholding. This includes income from self-employment, freelancing, rental properties, dividends, interest, and capital gains. These payments are necessary to avoid penalties for underpayment of taxes throughout the year.

How to Calculate Quarterly Estimated Taxes

To calculate your quarterly estimated taxes, follow the steps below:

  1. Estimate your total income for the year.
  2. Subtract deductions and exemptions to calculate your taxable income.
  3. Determine your tax rate based on IRS tax brackets.
  4. Calculate total annual tax liability.
  5. Divide your annual tax liability by four to determine each quarterly payment.

Note: If you have paid taxes in previous years, you can use last year’s tax liability as a reference to calculate your estimated taxes.

Quarter Payment Due Date Income Period Covered
Q1 April 15 January 1 - March 31
Q2 June 15 April 1 - May 31
Q3 September 15 June 1 - August 31
Q4 January 15 (following year) September 1 - December 31


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