Financial Glossary
Quarterly Taxes
Quarterly taxes are estimated income and self-employment tax payments made to the IRS, and often state tax authorities, at set points during the year on income that is not subject to withholding. They apply to the self-employed, business owners, investors, and others whose earnings do not have taxes automatically deducted. Paying enough through the year is how taxpayers avoid an underpayment penalty at filing time.
Problem & Application
STR hosts, campground owners, freelancers, and founders drawing distributions typically owe quarterly taxes because no employer is withholding for them. Underestimating leads to penalties and a large balance due, while overpaying ties up cash the business could use. A reliable income projection during the year keeps each payment close to the actual liability. Always confirm current due dates and safe-harbor rules against IRS guidance, as they can change.
In Short
Quarterly taxes spread your tax bill across the year, and accurate projections keep payments right-sized while avoiding penalties.