Look, we get it. June is not exactly tax season. You’re thinking about vacations, client projects, maybe fixing that weird rattle in the work truck. But the IRS? They’re thinking about estimated taxes, and they expect your next payment by June 16.
Miss it, and you’re basically handing them late fees on a silver platter.
Wait… What Are Estimated Taxes Again?
If you’re a small business owner, freelancer, side hustler, landlord, investor, or anyone else who earns income without tax automatically withheld, the IRS expects you to pay taxes throughout the year. Not just in April.
That means sending in four payments, spaced out through the year:
- April 15
- June 16
- September 16
- January 15 (next year)
Each payment covers income earned during that quarter. So your June 16 payment covers income from April 1 to May 31. The IRS expects you to estimate your income and pay accordingly. Hence the name.
How Much Should You Pay?
You have two main options:
- Use last year’s tax total as a safe baseline
- If your income is stable and you pay 100 percent of last year’s total tax liability (110 percent if you made over $150,000), the IRS considers you “safe harbor” and won’t penalize you, even if you underpay this year.
- Estimate based on this year’s actual income
- More accurate, but also riskier if you guess wrong. You’ll need good bookkeeping and up-to-date records to make this work.
Either way, the payment is usually 25 percent of your total annual tax, adjusted to reflect actual income and deductions during that quarter.
What If You Don’t Pay Anything by June 16?
The IRS charges penalties and interest starting the day the payment was due. These are not huge at first, but they stack up over time. The longer you wait, the more you’ll owe.
Here’s how it adds up:
- Late payment penalty: 0.5 percent of the unpaid amount per month
- Interest: Varies, but usually between 4 and 8 percent annually
- Late filing penalty (if you also skip the return later): 5 percent per month
And the worst part? You probably won’t know until next spring when you get your tax return and realize you’re short. Then the penalties show up.
What If You Pay Too Much?
If you overshoot, the IRS applies the excess to your next quarterly payment, or it gets refunded when you file your return. So overpaying is not the worst thing in the world. Underpaying, though? A whole different story.
How to Make a Payment
You can pay online through the IRS Direct Pay system, which pulls straight from your bank account. You can also use EFTPS.gov if you’ve registered, or your tax pro can submit on your behalf.
Avoid mailing checks unless you enjoy wondering whether they got lost, delayed, or stuck in someone’s lunch tray at the IRS.
Still Not Sure If You Need to Pay? Ask Yourself These Three Questions:
- Did you make more than $5,000 in self-employment, rental, or investment income so far this year?
- Did you have any big changes in income, clients, or contracts since Q1?
- Did you forget to pay in April?
If you said yes to any of those, now’s the time to take a closer look.
Bottom Line
Estimated taxes are annoying, but manageable. What’s not manageable is ignoring them and hoping it all works out next April.
So go ahead, send in that June 16 payment. Keep your books clean, your penalties low, and your future self grateful.
And if you’re not sure how much to pay, how to pay it, or whether you even need to… we can help you figure it out fast.
Book a quick call with us today.
We’ll sort it out together, show you exactly what to pay (not a penny more), and make sure the IRS doesn’t send you one of those “surprise” letters in a few months.
