Estimated Tax Payments
Definition
Quarterly payments of income tax made during the year by business owners and self-employed people, since no employer is withholding tax for them.
Want a deeper explanation?
Federal estimates are generally due in April, June, September and January, and states have their own schedules. Underpaying can bring penalties even if you pay everything at filing time.
Accurate quarterly books let your CPA size these payments to real profit. Watch for: estimated taxes left out of your cash forecast, because they are some of the largest single payments a profitable owner makes.
Example
An S corp owner expecting $180,000 of pass-through profit works with their CPA to set quarterly federal and state estimated payments, instead of facing one large bill plus penalties in April.