estimateD tax payments

If you earn income that isn’t subject to regular tax withholding — such as self-employment, freelance, rental, or small business income — you may need to make estimated tax payments throughout the year. These payments cover both income tax and self-employment tax (Social Security and Medicare) and help you avoid a large tax bill at year-end.

Calcuating the payments

Calculate your expected annual tax liability based on your income, deductions, and credits.

If You Have Only Business Income

If you earn income solely from a business, you’ll typically need to make quarterly estimated tax payments.
To determine how much to pay each quarter:

Review your Profit and Loss (P&L) statement to calculate your net business income.
Estimate your annual tax liability based on your projected income and deductions.
Divide that total by four to find your quarterly payment amount.

You can also use Form 1040-ES to calculate your payments.

If You Have Both W-2 and Business Income

If you earn both wages and business income, your W-2 withholding covers only the taxes on your paycheck — not your business income.
You have two options:

Option 1: Make separate quarterly estimated tax payments on your business income, or
Option 2: Increase your W-2 withholding to cover the additional tax due.

Utilize your Profit and Loss statement to estimate your business earnings, and use the IRS Tax Withholding Estimator to find out if your current withholding is adequate. It is best practice to base your estimated taxes on all sources of income, as the IRS Tax Withholding Estimator takes into account all forms of income.

State payments may also be needed to reach out to your tax professional for guidance.

how to make estimated tax payments

Set Up a Payment Schedule: Estimated taxes are typically paid quarterly. Mark the deadlines on your calendar to ensure timely payments: April 15, June 15, September 15, and January 15 of the following year.

Choose a Payment Method: You can pay estimated taxes online, by mail, or through a tax payment app.

Keep Records: Save copies of your payment confirmations and any correspondence for your records.

Adjust As Needed: Review your estimated tax payments periodically. If your income or deductions change significantly, adjust your payments to avoid underpayment penalties or overpayments.

Need Help?

At L&M Tax Plus, we help business owners and self-employed individuals estimate, calculate, and make their quarterly tax payments with confidence.
📞 Contact us today to review your income, determine your estimated tax amount, and stay ahead of your IRS obligations — all year long.