What Are Estimated Payments, Really?

If you’re self-employed, own a small business, or don’t have taxes automatically taken out of your income, estimated tax payments are how you prepay the IRS throughout the year. Think of them like quarterly check-ins with your tax bill, instead of one big surprise in April.

You may need to make estimated tax payments if:

• You expect to owe at least $1,000 in taxes this year after subtracting withholdings and credits.
• You run a corporation and expect to owe at least $500 in taxes.
• You get income from freelance work, side hustles, rental properties, investments, or business profits—basically, anything where no one’s withholding taxes for you.

In short? If you’re not getting a regular paycheck with taxes already taken out, this probably applies to you.

Mark Your Calendar: 2025 Estimated Tax Deadlines

Estimated taxes aren’t due just once. You make four payments spaced out across the year. Here’s when they’re due for 2025:

• April 15 – First payment
• June 16 – Second payment
• September 15 – Third payment
• January 15, 2026 – Final payment for the 2025 tax year

Pro tip: If a due date falls on a weekend or holiday, the IRS gives you until the next business day, but still, set those reminders now so nothing slips past.

How Much Do You Need to Pay?

The goal is to pay in throughout the year so that when tax season rolls around, you’ve already covered most (if not all) of what you owe. You can figure out how much to pay using one of two approaches:

• The “Safe Harbor” Method: Pay at least 100% of what you owed last year (or 110% if you made more than $150,000). If you hit this amount, the IRS generally won’t penalize you, even if you end up owing more.
• The “90% Rule”: Estimate your 2025 tax bill and pay at least 90% of that throughout the year.

Not sure which method is best for you? That’s where working with a tax pro (like us!) can help. We’ll crunch the numbers so you can stay focused on running your business.

How to Pay (Without the Hassle)

Good news: You’ve got options. You can pay estimated taxes:

• Online with IRS Direct Pay
• Through the Electronic Federal Tax Payment System (EFTPS)
• By credit/debit card via approved IRS payment processors
• Or the old-fashioned way: Mailing a check with Form 1040-ES

Whichever way you choose, keep those receipts and payment confirmations. They’re your backup in case the IRS comes calling.

What Happens If You Don’t Pay Enough?

Unfortunately, the IRS doesn’t just let it slide if you underpay. You might owe penalties and interest, even if you end up getting a refund later.

To stay in the clear:

• Pay on time, every time.
• Make sure you’re paying enough using the safe harbor or 90% rule.
• If your income jumps mid-year, adjust your payments. Don’t wait until it’s too late.

Estimated taxes aren’t something to “set and forget.” Checking in a few times during the year can help you avoid surprises and stay penalty-free.

A Quick Word About Florida Business Taxes

One of the perks of running a business in Florida? No personal state income tax. But don’t tune out just yet. There are still a few things you should know:

• Corporate Tax: Florida has a 5.5% corporate income tax. So if your business is structured as a corporation, you’ve got another layer to plan for.
• Sales Tax: Florida’s base rate is 6%, but local counties can tack on more—up to 2%, depending on where you are.
• Business Rent Tax: In recent years, Florida has been lowering the sales tax on commercial rent. It’s worth checking if any new updates could benefit you.

Let’s Bust a Common Myth: Extensions and Audits

We hear this one a lot: “If I file an extension or make estimated payments, does that increase my chance of getting audited?”

Nope. Filing an extension or paying estimated taxes has zero effect on your audit risk. It’s just a way to stay organized and avoid penalties. The IRS isn’t out to get you for doing things the responsible way. We promise.

A Better Tax Season Starts With Planning

Here’s the deal: estimated taxes are one of the easiest things to mess up, but also one of the easiest to get right with a little help.

At Watson & Associates, we work with Florida business owners and entrepreneurs every day to make tax season less stressful. We’ll help you:

• Figure out what you owe and when
• Set up an easy payment plan
• Track your income and expenses
• Keep Uncle Sam happy (without overpaying)

Taxes don’t have to be overwhelming. With the right partner, they can be one less thing on your plate.