Self-employed workers, businesses, and those with low withholdings face penalties if they miss today’s quarterly tax payment deadline.
September 15 is a critical date for millions of U.S. taxpayers, as it marks the deadline for quarterly estimated tax payments to the Internal Revenue Service (IRS). This requirement applies to those with income not subject to automatic federal withholding, such as self-employed workers, investors, and people with side jobs. According to Forbes, this deadline is especially important given the growing number of independent workers and those with variable incomes.
Paying estimated taxes on time is essential for freelancers, self-employed individuals, investors, and some businesses. It also applies to W-2 employees if their monthly withholdings don’t cover their full annual tax liability. CNBC reports that missing this deadline can lead to penalties and interest charges, even if the taxpayer is due a refund when filing their return.
Who Needs to Make These Payments?
The IRS requires quarterly payments from individuals and businesses whose income isn’t fully covered by tax withholdings. This includes those receiving 1099 forms, like independent contractors, as well as employees whose payroll deductions fall short of their annual tax obligation, corporations, and certain investors.
The IRS states that you must make these payments if you expect to owe at least $1,000 in federal taxes for the year after withholdings and refundable credits. The rule also applies if your withholdings and credits cover less than 90% of your current year’s tax liability or less than 100% of the previous year’s tax liability, whichever is smaller. For those with an adjusted gross income above $150,000 (or $75,000 for married individuals filing separately), the threshold rises to 110% of the prior year’s tax obligation.
Self-employed workers and those with side gigs are often required to make these payments since their income typically lacks automatic withholding. For corporations, the requirement applies if they expect to owe at least $500 in taxes by the end of the tax year. CNN notes that thousands of taxpayers make mistakes in calculating or forecasting these payments each year, leading to penalties.
How to Make the Payments
The IRS offers several ways to make quarterly tax payments. They recommend electronic methods, such as the IRS online account, the IRS2Go mobile app, Direct Pay, or the Electronic Federal Tax Payment System (EFTPS) from the U.S. Treasury. Payments via debit or credit cards are also accepted, though they may come with extra fees.
For those preferring traditional methods, payments can be mailed using Form 1040-ES with a payment voucher. The IRS also allows cash payments at certain partnered retail locations nationwide, but digital options are preferred for their speed and security. Electronic payments provide immediate proof of payment and streamline processing.
What Happens If You Miss the Deadline?
Failing to make quarterly tax payments on time can result in penalties for late or insufficient payments, even if you’re eligible for a refund at filing time, according to CNBC. The IRS may waive penalties under specific conditions, such as natural disasters, extraordinary events, recent retirement, or disability, but only if the failure to pay is due to “reasonable cause” and not deliberate neglect.
The IRS considers factors like being 62 or older, retiring, or becoming disabled during the current or previous tax year, but exemptions require documentation and are reviewed case by case. Tax authorities stress the importance of accurately calculating payments and using official digital tools to avoid errors.