Estimated tax payments are quarterly payments made to tax authorities by individuals or businesses that do not have taxes automatically withheld from their income.
This commonly includes self-employed individuals, freelancers, investors, or anyone earning income not subject to regular payroll withholding. These payments are based on an estimate of the taxpayer’s income, deductions, and credits for the year, often using the previous year’s tax return as a guide.
Making timely estimated payments helps taxpayers avoid penalties and interest for underpayment.