What Every Self-Employed Person Should Know About Quarterly Estimated Taxes

Self-employed and 1099 workers don't have taxes withheld automatically. Here's what quarterly estimated taxes are, when they're due, and how to make sure you're not caught off guard.

What Every Self-Employed Person Should Know About Quarterly Estimated Taxes

When you work a traditional job, your employer handles your taxes automatically. Every paycheck, a portion is withheld and sent to the IRS on your behalf. You file in April, maybe get a refund, and move on.

When you're self-employed, none of that happens automatically.

You are responsible for calculating what you owe, setting the money aside, and sending it to the IRS four times a year. Miss those payments and you could face penalties, even if you pay everything you owe when you file.

Here's what you need to know:

• What Are Quarterly Estimated Taxes?

Quarterly estimated taxes are payments self-employed individuals, freelancers, 1099 workers, and small business owners make directly to the IRS throughout the year to cover their tax liability as they earn income.

The IRS operates on a pay-as-you-go system. If you wait until April to pay everything you owe, you'll likely face an underpayment penalty, regardless of whether you eventually pay in full.

• Who Needs to Pay Them?

You need to make quarterly estimated tax payments if:

• You're self-employed or a freelancer

• You receive 1099 income

• You own a small business

• You have investment income, rental income, or other income without withholding

• You expect to owe at least $1,000 in federal taxes for the year

If any of these apply to you, quarterly payments are not optional. They're a requirement.

When Are They Due?

The IRS divides the year into four payment periods. For 2026 the remaining deadlines are:

• Q3: September 15, 2026

• Q4: January 15, 2027

Missing a deadline doesn't mean you can't pay. It means you'll owe a penalty on top of what you already owe. Paying late is always better than not paying at all, but staying on schedule is always better than paying late.

How Much Should You Pay?

This is where most self-employed people get stuck. There's no employer doing the math for you, you have to figure it out yourself.

There are two approaches the IRS accepts:

Option 1: Pay 100% of Last Year's Tax Liability
Divide what you owed last year by four and pay that amount each quarter. This is the simplest method and protects you from underpayment penalties even if you earn more this year.

Option 2: Pay 90% of This Year's Estimated Liability
If your income is significantly higher or lower than last year, you can estimate what you'll owe this year and pay 90% of that in quarterly installments.

Most self-employed individuals use Option 1 as a baseline and adjust if their income changes significantly.

What About State Taxes?

Federal estimated taxes are just one piece of the puzzle. Most states with an income tax also require quarterly estimated payments on the same schedule.

Florida has no state income tax, so if you're based in Fort Myers, state estimated payments are not a concern. If you earn income in other states, check those states' requirements separately.

What Happens If You Miss a Payment?

Missing a quarterly payment doesn't trigger an audit or an IRS notice automatically. What it does trigger is an underpayment penalty calculated on the amount you should have paid and how long it went unpaid.

The penalty amount changes quarterly based on IRS interest rates. It's typically small but it adds up, and it's completely avoidable.

Tips to Stay on Track

• Open a separate savings account for taxes and transfer a percentage of every payment you receive. A common starting point for self-employed individuals is 25 to 30% of net income

• Set calendar reminders for each quarterly deadline so nothing sneaks up on you

• Track your income and expenses monthly so your estimated payment calculation is based on real numbers, not guesses

• Work with a tax professional who can calculate your liability accurately and help you avoid overpaying or underpaying

The Bottom Line

Quarterly estimated taxes are one of the biggest adjustments people face when they go from traditional employment to self-employment. The system is designed for you to pay as you go, and the penalty for not doing so is real, even if it's small.

The good news is that with a little organization and the right support, it's completely manageable.

At T.S. Simmons Financial Group we help self-employed individuals and 1099 workers calculate their quarterly payments, stay compliant, and keep more of what they earn.

Have questions about your quarterly taxes? Schedule a consultation at tssfg.com and let's make sure you're on track.