1. What is Quarterly Tax Payment?

Quarterly tax payments are estimated tax payments made four times a year by self-employed individuals and those who don't have taxes withheld from their income. These payments cover income tax as well as self-employment tax.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( Estimated\ Taxable\ Income \) — Your projected annual income subject to tax
• \( Tax\ Rate \) — Your estimated effective tax rate (as a percentage)

Explanation: The formula calculates your total estimated annual tax and divides it by 4 to determine each quarterly payment.

3. Importance of Quarterly Tax Payments

Details: Making accurate quarterly payments helps avoid underpayment penalties and large tax bills at year-end. It's especially important for freelancers, independent contractors, and small business owners.

4. Using the Calculator

Tips: Enter your best estimate of annual taxable income and your expected tax rate. The calculator will estimate your quarterly payment. Remember to adjust as your income changes throughout the year.

5. Frequently Asked Questions (FAQ)

Q1: Who needs to pay quarterly taxes?
A: Generally, if you expect to owe at least $1,000 in tax for the year after subtracting withholding and refundable credits.

Q2: When are quarterly payments due?
A: April 15, June 15, September 15, and January 15 of the following year.

Q3: How do I estimate my tax rate?
A: Review last year's tax return or consult a tax professional. Include both income tax and self-employment tax (15.3%) if applicable.

Q4: What if my income changes during the year?
A: You can adjust subsequent payments using the IRS Form 1040-ES worksheet.

Q5: Are there penalties for underpayment?
A: Yes, the IRS may charge penalties if you don't pay enough tax throughout the year.