The Internal Revenue Service is reminding self-employed individuals, retirees, investors, businesses, and corporations that the deadline for making first quarter estimated tax payments for the 2025 tax year is Monday, April 15.
Federal income taxes operate on a pay-as-you-go system, and the law requires that taxes be paid as income is earned throughout the year. While many taxpayers meet this obligation through withholding from their wages, pensions, Social Security benefits, or other government payments such as unemployment compensation, others must submit quarterly estimated payments.
This includes individuals who are self-employed or working in the gig economy, as well as retirees and investors who receive income not typically subject to withholding. “Taxpayers who are self-employed or in the gig economy are generally required to make estimated tax payments,” the IRS stated in a news release. “Likewise, retirees, investors and others frequently need to make these payments because a significant portion of their income is not subject to withholding.”
When calculating these payments, taxpayers should account for all earned income, including part-time work, side jobs, or the sale of goods and services, which are often reported on Form 1099-K. Other forms of income that may require estimated tax payments include interest, dividends, capital gains, alimony, and rental income.
By submitting estimated payments quarterly, taxpayers can avoid penalties and stay compliant with federal tax obligations. However, exceptions to penalties are available for certain groups, such as farmers and fishers, recent retirees, individuals with disabilities, those with irregular income, and victims of disasters or terrorist attacks.
To compute estimated taxes, taxpayers can consult Form 1040-ES, Estimated Tax for Individuals, which provides detailed instructions. For added convenience, the IRS encourages taxpayers to use its Online Account service, where they can make payments, review their payment history, monitor pending payments, and access other important tax information.
Payment options include traditional methods such as mailing a check, as well as electronic methods like IRS Direct Pay, debit or credit card, digital wallet, or the Treasury Department’s Electronic Federal Tax Payment System. Taxpayers paying by check should make it payable to the “United States Treasury.”
Additional guidance can be found in IRS Publication 505, Tax Withholding and Estimated Tax. This publication is especially useful for individuals dealing with dividend or capital gains income, the alternative minimum tax, or self-employment tax, or who have other special tax circumstances.
The IRS also recommends using the agency’s Tax Withholding Estimator tool. This online resource helps taxpayers determine the proper amount of tax to withhold from their paychecks, which can prevent underpayment and minimize the risk of penalties. Regularly adjusting withholding can also result in larger paychecks throughout the year and potentially smaller tax refunds when filing.
For more information or to make a payment, taxpayers can visit the IRS website and navigate to the “Make a Payment” section.