If you’re self-employed, own a business, earn freelance or investment income—or simply don’t have enough taxes withheld from your paycheck—you may be required to make estimated tax payments throughout the year. But most people don’t know when they apply, how they’re calculated, or how to avoid IRS penalties for underpayment.

At Polaris Tax & Accounting, we specialize in helping individuals and small business owners stay compliant with estimated taxes—and avoid surprises at tax time.

What Are Estimated Tax Payments?

The U.S. tax system operates on a “pay-as-you-go” basis. If taxes aren’t automatically withheld from your income (like W-2 wages), you’re expected to make tax payments periodically—usually in four installments each year:

  • April 15
  • June 15
  • September 15
  • January 15 of the following year

These payments cover not only income tax, but also self-employment tax, which includes Social Security and Medicare.

Who Needs to Pay Estimated Taxes?

You likely need to pay quarterly taxes if you:

  • Are self-employed or a contractor
  • Run a business as a sole proprietor or S Corporation
  • Earn rental, investment, or side income
  • Don’t have enough withholding from your regular job to cover your tax liability

If you expect to owe at least $1,000 in federal tax for the year after subtracting your withholding and credits, the IRS generally requires estimated payments.

Learn more about how we help clients navigate this at our Tax Planning & Projections page.

What Happens If You Don’t Pay Enough?

If you don’t make estimated payments—or if you underpay—the IRS can charge you a penalty for underpayment of estimated taxes, even if you pay your full tax bill when you file. These penalties accrue quarterly, and they’re based on how late and how short your payments are.

The penalty amount fluctuates with interest rates but can easily exceed 7–8% annually, making it one of the most expensive mistakes small business owners and high-income earners can make.

IRS Safe Harbor Rules

The IRS offers “safe harbor” thresholds that, if met, generally protect you from estimated tax penalties:

  • Pay 100% of last year’s total tax liability (or 110% if your AGI exceeded $150,000)
  • OR pay 90% of your current year’s expected tax liability

Our clients rarely try to hit these manually—we run quarterly tax projections to calculate accurate payments and submit them proactively.

Explore how Polaris helps clients plan year-round:
Year-Round Tax Services

How Polaris Helps You Stay Compliant

We don’t guess. We:

  • Review your income and withholding each quarter
  • Run updated tax projections as things change
  • Tell you exactly how much to pay and when
  • Help you submit payments to the IRS through EFTPS or direct pay

No more uncertainty. No more stress. Just clear, timely guidance that keeps you penalty-free and cash-flow aware.

Get Proactive—Not Penalized

We offer 72-hour turnaround for tax projections and personalized guidance all year—not just in April.

📞 Call us at 954-423-3577
🌐 https://polaristaxandaccounting.com

If you’re unsure about whether you owe estimated taxes, or if you’ve been hit with penalties before, let’s get proactive.