If you’re required to pay quarterly taxes and fail to do so, you might be subject to a penalty.
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Some self-employed workers and independent contractors have to pay quarterly taxes.
The remaining due dates for 2022 earnings are September 15, 2022, and January 17, 2023.
If you expect to have a tax liability of $1,000 or more, estimate and pay quarterly taxes on your earnings.
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Most people who earn a steady paycheck only think about paying taxes when they sit down to file their tax return once a year.
But if you don’t earn a salary or hourly wage where you pay federal taxes through withholdings, you might have to send tax payments to the IRS every quarter. Self-employed people and gig workers typically pay taxes this way.
Alternatively, you can estimate your federal tax liability for the entire year and pay in full by Tax Day.
When are quarterly taxes due in 2022?
Each tax year is divided into four payment periods.
Here are the remaining due dates for income earned in 2022:
September 15: taxes due on earnings from June 1 – August 31, or for the full year aheadJanuary 17, 2023: taxes due on earnings from September 1 – December 31, or for the full year ahead
Who must pay quarterly taxes?
If you expect to have a tax liability of $1,000 or more for the tax year, then you likely have to pay quarterly taxes. If you underpay, you might be subject to a penalty. If you overpay, you’ll get your money back as a refund.
The US tax system operates on a “pay-as-you-go” basis. If you earn money that isn’t subject to withholding from an employer — Social Security and Medicare tax, known as FICA, and income tax — then you’ll have to pay taxes every few months on those earnings, rather than waiting until annual tax returns are due.
This can include earnings from the sale of an investment, rental income, dividends, interest, and self-employment income. Also, if you receive unemployment benefits and don’t opt-in to withholding, you’ll be responsible for making quarterly estimated payments.
There’s some math involved in figuring out how much you need to pay in quarterly taxes. Use the IRS Estimated Tax Worksheet or try an online calculator. In both cases you’ll need to estimate your earnings and note the deductions and credits you plan to use.
Even if you did fill out a W-4 through your employer to withhold taxes from your paycheck, you might have to pay quarterly taxes if your withholdings don’t cover the smaller of 90% of your tax liability for the current year, or 100% of your tax liability for the previous year (or 110% if your adjusted gross income was more than $150,000).
Generally, you should make estimated tax payments in four equal installments to avoid a penalty. However, individuals who receive uneven income amounts throughout the year may vary their estimated tax payment amounts to avoid or lower the penalty using the annualized installment method. Use Form 2210 to calculate if you owe a penalty for underpaying your estimated tax and to figure out the amount of the penalty if one applies.
You are not required to pay estimated taxes if you meet three conditions: you had no tax liability for the prior year, you were a US citizen or resident for the whole year, and your prior tax year covered a 12-month period.
Farmers and fishermen as defined by the IRS have special rules.
How do you pay quarterly taxes?
The safest and quickest way to make your payments is through IRS Direct Pay, which transfers funds from your bank account directly to the IRS for free (download the IRS2Go app to do it from your phone). You can also use a debit or credit card, but you’ll be charged a fee.
After you make the payment online, keep records of the confirmation number and the amount you paid, or opt-in to email notifications. You’ll need these numbers to prepare your tax return.
If you live in a state that has income tax, you may also have to make estimated tax payments to your state, so be sure to look up your own state’s guidelines and due dates.