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According to the Internal Revenue Service (IRS), the estimated tax deadline for the second quarter of 2024 is June 17, and if you don’t pay, you may be hit with a penalty.
You generally need to pay estimated taxes on income that is not subject to withholding, such as from contract work, freelance or gig economy work, or if you run a small business.
But experts say quarterly estimated taxes aren’t just for self-employed or small business owners.
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For example, after taking a large distribution from a pre-tax IRA or making a large profit from selling assets, you may need to calculate the quarterly Payment.
If you anticipate a tax liability of at least $1,000 or more on your 2024 return, you must pay your estimated taxes quarterly.
For the 2024 tax year, the expected tax deadlines are April 15, June 17, September 16, and January 15, 2025. Calculated interest-based penalty.
Avoid penalties by meeting “safe harbor” rules
Sheneya Wilson, a New York CPA and founder of Fola Financial, explains that penalties for missing estimated tax payments can be avoided by complying with the IRS’s “safe harbor rules.”
You only need to pay at least 90% of your tax liability for the current year or 100% of last year’s tax, whichever is less, to satisfy the safe harbor rules.
However, if your adjusted gross income is $150,000 or more starting in 2023, the threshold rises to 110%. You can find your adjusted gross income on line 11 of your 2023 tax return, Form 1040.
While the safe harbor protects you from penalties, you may still have to pay taxes in 2024 if you earn more than you did in 2023 and don’t pay the higher estimated payments.
Wilson said if you anticipate “rapid revenue growth” in 2024, you should work with a tax professional to develop “appropriate tax planning and forecasting.”
How to make quarterly estimated tax payments
According to the IRS, paying your estimated taxes online is “the safest, fastest and easiest way.”
You can use your online account, IRS Direct Pay, or the U.S. Department of the Treasury’s Electronic Federal Tax System (EFTPS).
Wilson explained that “every taxpayer should have an account” on IRS.gov, which makes it easy to make payments and reconcile transactions.
However, if you prefer to pay by mail, experts recommend using registered mail with a return receipt as proof of on-time payment.
