How do I handle quarterly estimated tax payments?

If you expect to owe at least $1,000 in federal taxes for the year after subtracting withholding and credits, you generally must make quarterly estimated tax payments to avoid penalties. The due dates are April 15, June 15, September 15, and January 15. The safest calculation method is the 'safe harbor' rule: pay at least 100% of your prior year's total tax liability (110% if your prior year AGI exceeded $150,000) in equal quarterly installments. Alternatively, pay 90% of your current year's actual liability. Self-employed individuals should set aside 25–30% of every payment received in a separate savings account earmarked for taxes, so the money is ready when quarterly deadlines arrive.