Estimated Taxes

Employees prepay tax invisibly through withholding. Everyone else, freelancers, landlords with big gains, retirees drawing from pre-tax accounts without withholding, prepays through Form 1040-ES vouchers four times a year. The quarters are famously uneven: the second covers only April and May, and the fourth stretches into the next January.

Missing a payment triggers an interest-like underpayment penalty computed per quarter from each missed date (Form 2210). The system is more forgiving than it sounds because of the safe-harbor rules, which cap what you must prepay at the smaller of 90 percent of this year’s tax or 100 to 110 percent of last year’s, and because W-2 withholding counts as paid evenly through the year no matter when it happens. The quarterly estimated tax calculator turns those rules into four concrete payment amounts.