What Are Quarterly Taxes, and Do You Need to Pay Them?

Summary of What This Blog Covers

• If you expect to owe over $1,000 in taxes, you likely need to pay quarterly.
• Payments cover income tax, self-employment tax, and possibly state tax.
• Estimate your yearly income, calculate your tax, and divide by four.
• Missing payments leads to penalties. Work with a CPA to stay on track.

Let’s talk about something that sneaks up on more business owners than we can count: quarterly taxes.

If you’re self-employed, running a small business, freelancing, or collecting income that’s not getting taxes withheld automatically, then yes, you’re likely supposed to pay taxes four times a year. And if you didn’t know that before today, that’s okay. Most entrepreneurs have that “Wait… what?” moment.

The good news? You’re not alone. And with the right plan, strategy, and support from a trusted CPA in Austin, Texas, you can stay ahead of your quarterly tax obligations, avoid unnecessary penalties, and build financial confidence.

At Insogna CPA, we’re not just tax professionals. We’re strategic financial partners who work with entrepreneurs across the country to simplify the complex, eliminate surprises, and help you make tax-smart decisions all year long.

So let’s dive in. What are quarterly taxes, who needs to pay them, how do they work, and what’s the smartest way to stay compliant while protecting your business cash flow?

What Are Quarterly Taxes?

Quarterly taxes are estimated tax payments that self-employed individuals and businesses make to the IRS (and in some cases, state tax agencies) throughout the year. These payments are due four times annually and are designed to help the government collect income tax and self-employment tax on earnings that aren’t subject to automatic payroll withholding.

Think of it this way: if you had a W-2 job in the past, your employer withheld federal taxes, Social Security, and Medicare from every paycheck. But now that you’re your own boss? The IRS still wants its cut and you’re responsible for sending it in directly.

Quarterly taxes cover:

• Federal income tax

   

• Self-employment tax (which includes Social Security and Medicare)
• State income tax, where applicable

If you’ve been searching “tax preparer near you” or “tax help” lately, you’re probably already feeling the weight of tax complexity. But quarterly taxes are actually an opportunity to get organized and avoid a massive tax bill at the end of the year.

Who Is Required to Pay Quarterly Taxes?

The IRS has a simple rule of thumb: if you expect to owe $1,000 or more in taxes when you file your annual return, you must make estimated quarterly tax payments.

That means quarterly taxes are required if you fall into one or more of these categories:

• Freelancers and independent contractors who receive 1099 income
• Small business owners who report on Schedule C
• S-Corp owners who take shareholder distributions
• Partners in partnerships

   

• Landlords and real estate investors

   

• Gig economy workers (Uber, Etsy, Airbnb hosts, etc.)
• Individuals with interest, dividend, or capital gains income with no withholding
• Anyone who doesn’t have sufficient federal income tax withheld from other income sources

If you have a diversified income stream and you’re unsure whether quarterly payments apply to you, this is exactly where a tax professional near you or tax advisor in Austin can clarify your obligations and develop a tailored payment plan.

How Quarterly Taxes Work (And How to Calculate Them)

Now let’s talk about how you actually figure out what to pay. The idea is to make payments that cover your estimated tax liability for the year, divided into four installments. The key word here is estimated. The IRS doesn’t expect perfection, but they do expect effort and timeliness.

Step 1: Estimate Your Annual Income

Start by forecasting your expected gross income for the year. This includes:

• Revenue from your business
• Income from freelance work, consulting, or side gigs
• Rental income
• Investment income (if applicable)
• Royalties or residuals

Now subtract your business deductions, including:

• Software and tools
• Marketing expenses
• Travel related to business
• Professional services (legal, accounting)
• Insurance
• Office supplies
• Equipment
• Home office deduction (if applicable)
• Retirement contributions (Solo 401(k), SEP IRA, etc.)

What remains is your net income—your best projection of what your taxable income will be for the year.

If this feels like a wild guess, a small business CPA in Austin can help you use your YTD profit-and-loss reports to build a more accurate forecast.

Step 2: Estimate Your Tax Liability

Once you have your projected net income, it’s time to calculate your estimated taxes. This includes:

• Federal income tax, based on your tax bracket
• Self-employment tax (15.3% on net earnings)
• State income tax, if your state has one

As a rough estimate, most self-employed professionals use 25–30% of net income as a starting point. For example, if your net income is $80,000:

• $80,000 x 25% = $20,000
• $20,000 ÷ 4 = $5,000 per quarter

Of course, this estimate doesn’t account for special credits, deductions, or multiple income sources. If you want to be precise, consult with a certified CPA near you or Austin accounting firm to fine-tune your calculations.

Step 3: Know Your Deadlines

These are the IRS quarterly payment deadlines:

• Q1 – April 15
• Q2 – June 15
• Q3 – September 15
• Q4 – January 15 (of the following year)

If any of these dates fall on a weekend or holiday, the due date shifts to the next business day.

Missing these deadlines may lead to:

• Late payment penalties

   

• Underpayment penalties

   

• Interest on unpaid tax balances

   

To avoid this, many of our clients at Insogna CPA automate their estimated payments through IRS Direct Pay, EFTPS, or state portals. If you’d prefer to handle it old-school, Form 1040-ES can be mailed with a check.

What Happens If You Don’t Pay Quarterly Taxes?

Let’s be honest: missing quarterly payments is common, especially among first-time entrepreneurs. But just because it’s common doesn’t mean it’s consequence-free.

Here’s what happens:

• The IRS assesses a penalty for underpayment, which can stack fast if payments are repeatedly missed
• You may also incur interest charges, compounded daily
• Come April, your tax bill may be much larger than expected
• You risk falling into a reactive tax cycle, where every spring feels like financial triage

If you’re behind, don’t panic. A qualified CPA in Austin, Texas or enrolled agent can help you assess the damage, correct your course, and possibly reduce or waive penalties.

Smart Strategies to Stay Ahead of Quarterly Taxes

Here’s where the real value of a proactive tax strategy kicks in. Paying estimated taxes doesn’t have to be a quarterly fire drill. In fact, with the right systems in place, it can become a seamless, automated part of your business operations.

Here’s how we help clients stay ahead at Insogna CPA:

1. Set Up a Tax Savings Account

Transfer a fixed percentage (usually 25–30%) of each business income deposit into a separate savings account earmarked for taxes. That way, when payments are due, the money is already there.

2. Automate Payments

Using IRS Direct Pay or EFTPS, you can set up recurring transfers and never miss a due date.

3. Use Cloud Accounting

Software like QuickBooks, Xero, or FreshBooks lets you track income, expenses, and estimated tax obligations in real time.

4. Partner With a Year-Round CPA

Tax prep is just one piece of the puzzle. A true certified public accountant near you provides year-round planning, real-time forecasting, and coaching on how to reduce your taxable income legally and effectively.

Bonus Topic: FBAR and Foreign Accounts

If you hold foreign financial accounts totaling more than $10,000 at any point during the year, you’re required to file an FBAR (Report of Foreign Bank and Financial Accounts).

Failing to file this form can result in penalties starting at $10,000, even if you weren’t trying to hide anything.

If you’ve been Googling “FBAR filing,” or you have international investments, let your tax accountant near you know. We’ve helped clients across the U.S. manage FBAR compliance as part of their broader tax strategy.

So, Do You Really Need to Pay Taxes Four Times a Year?

If you’re earning income that isn’t getting taxed through payroll, and you expect to owe more than $1,000 at year-end, then yes. Quarterly estimated tax payments are a must.

But here’s the thing: this doesn’t have to be stressful. It doesn’t have to be reactive. And it definitely doesn’t have to derail your growth.

When you partner with a firm like Insogna CPA, you’re not just checking a compliance box. You’re investing in a system that:

• Protects your cash flow
• Reduces surprises
• Unlocks new deductions
• Gives you a clear, real-time view of your finances

Why Entrepreneurs Choose Insogna CPA

We’re not your average tax preparation service near you. At Insogna CPA, we serve high-performing entrepreneurs who expect excellence, proactivity, and real relationships not canned advice.

Here’s what sets us apart:

• Concierge-Level Service – Every client gets a tailored experience
• Modern Systems – We use cloud platforms and real-time reporting
• Proactive Strategy – Tax planning, not just tax filing
• Trusted Partnerships – We grow with our clients, year after year

We work with clients in Austin, across Texas, and nationwide.

Let’s Get Your Quarterly Taxes Under Control

Whether you’re a solo freelancer, managing multiple business entities, or just looking for a reliable certified CPA near you, we can help.

Start with a free consultation and let’s map out a tax strategy that works for your business, your lifestyle, and your long-term goals.

Because at Insogna CPA, your success is our strategy.

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