Third Quarter Estimated Taxes: What You Need to Know Before the September Deadline

If you're self-employed, a business owner, or have income that doesn't have taxes withheld automatically, September 15 is a date worth circling on your calendar. That's when your third quarter estimated tax payment is due.

Why Estimated Payments Matter

The IRS operates on a pay-as-you-go system. If you're not having enough tax withheld throughout the year, whether from self-employment income, rental income, investment gains, or side work, you're expected to make quarterly payments to cover what you owe.

Skip a payment, or underpay significantly, and you may face an underpayment penalty even if you pay your full balance by the April filing deadline.

How to Know If You Need to Pay

Generally, if you expect to owe $1,000 or more in taxes for the year after subtracting withholding and credits, quarterly payments are likely required. This applies to freelancers, contractors, small business owners, and anyone with significant untaxed income.

Getting the Number Right

The tricky part isn't knowing that you owe. It's knowing how much. Pay too little and penalties follow. Pay too much and you've given the IRS an interest-free loan of your own money.

The right estimate depends on your income so far this year, what's expected for the rest of it, deductions, credits, and any changes since your last filing, a new business venture, a life event, a shift in income.

Don't Wait Until September 14

The best time to review your estimated payments is now, while there's still room to adjust if your income has shifted from what you projected earlier in the year.

If you're unsure whether you're on track, or if this is your first year navigating estimated payments, we can help you calculate the right number and avoid penalties.

📞 Call Denise Stubbs, CPA today to schedule a review before the September 15 deadline.