US contractor guide
How to plan for quarterly estimated tax payments
If you receive income without enough tax withholding, you may need to make estimated tax payments during the year rather than wait until you file.
In short
Estimate your annual federal, self-employment, state and local tax, subtract tax already withheld elsewhere, and reserve the remaining amount as income arrives.
Who may need estimated payments?
Freelancers, sole proprietors, landlords, investors and people with a side business often have income with no employer withholding. The amount required depends on your expected tax, prior-year tax and the withholding you already have.
A practical reserve method
Keep business income separate where possible. Each time you are paid, move a chosen percentage into a tax savings account. Revisit the figure when income or deductible expenses change instead of assuming every quarter will be identical.
Federal and state systems are separate
Federal estimated tax is paid to the IRS. Your state may have different thresholds, due dates and payment methods, so check its revenue department too.
A planner is not a safe-harbor calculation
Safe-harbor and penalty rules are nuanced. The NetPay Lens planner is for cash flow; it does not tell you the exact minimum payment or confirm you will avoid an underpayment penalty.
Use the quarterly tax planner to organise your reserve. For the actual rules, consult IRS Publication 505.