When are Q4 estimated taxes due for self-employed individuals?
For employees whose employers withhold taxes from each paycheck, the only major tax deadline is usually April 15. However, for self-employed individuals, freelancers, independent contractors, and small business owners, the IRS requires quarterly estimated tax payments throughout the year.
These deadlines help ensure that taxes are paid as income is earned, rather than in one lump sum at year’s end.
For the fourth quarter, estimated income tax payments are due no later than January 15 of the following year.
How do I determine my estimated quarterly taxes?
Your estimated tax payments are based on your expected income, deductions, and credits for the year. Self-employed individuals must also include self-employment tax—which covers Social Security and Medicare contributions—and, in some cases, the alternative minimum tax (AMT).
To estimate your quarterly payments accurately and avoid surprises in April, use IRS Form 1040-ES, which includes a worksheet and tax rate tables.
Your quarterly payments do not have to be equal. For example, if your income drops later in the year, you can adjust your fourth-quarter payment to reflect your lower earnings. Similarly, if you earned more income in Q4, you may need to increase your payment to avoid an underpayment penalty.
Is there a penalty for underpayment of estimated taxes?
Yes. If you don’t pay enough in estimated taxes throughout the year, you may owe a penalty when you file your annual return.
However, the IRS generally waives the penalty if:
- You owe less than $1,000 in tax after subtracting your withholding and estimated payments, or
- You’ve paid at least 90% of the current year’s tax liability or 100% of last year’s tax liability (whichever is smaller) through timely payments.
The IRS may also waive the penalty in certain special circumstances, such as:
- A casualty, disaster, or other unusual event, if applying the penalty would be unfair, or
- If you retired or became disabled during the year and the underpayment wasn’t due to willful neglect.
You can use IRS Form 2210 to check whether you owe a penalty and to calculate any amount due.
Seeking Professional Guidance Can Help You Meet Your Self-Employed Tax Obligations
If you expect to owe income and self-employment taxes for the fourth quarter, be sure to calculate and pay your estimated taxes by January 15 to avoid potential penalties.
Business entities—such as sole proprietorships, limited liability companies (LLCs), partnerships, and corporations—are taxed differently under federal and state law. Some business owners may benefit from reviewing their business structure to see whether changing entity type could reduce future tax liabilities.
If you have legal questions about your self-employment tax obligations, contact a Rocket Legal Pro for fast, affordable guidance tailored to your business.
Please note: This page offers general legal information, not but not legal advice tailored for your specific legal situation. Rocket Lawyer Incorporated isn't a law firm or a substitute for one. For further information on this topic, you can Ask a Legal Pro.
