If you withhold taxes from a pension, social security or distributions from a retirement account you may not need to make estimated payments. Also if you are still working an have enough withholding being taken out of your check from your employer you may not need to make estimated payments.
The IRS uses a pay-as-you-go income tax system, meaning you must pay your taxes as you earn income. It enforces this by charging penalties for underpayment. You get them if you haven't paid enough income taxes through withholding or making quarterly payments. It also charges penalties on late payments even if you end up getting a refund.
The IRS uses a couple of rules to determine if you need to make quarterly estimated tax payments:
- You expect to owe more than $1,000 after subtracting withholding and tax credits when filing your return, or
- You expect your withholding and tax credits to be less than:
- 90% of your estimated tax liability for the current tax year
- 100% of the previous year's tax liability, assuming it covers all 12 months of the calendar year
For tax year 2025, the following payment dates apply for avoiding penalties:
- 1st Quarterly Estimated Tax Payment April 15, 2025
- 2nd Quarterly Estimated Tax Payment June 16, 2025
- 3rd Quarterly Estimated Tax Payment September 15, 2025
- 4th Quarterly Estimated Tax Payment January 15, 2026
Helpful Links:
Estimated taxes
A Guide to Paying Quarterly Taxes
Estimated Taxes: How to Determine What to Pay and When
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