There has been a huge change to our household this year that goes far beyond a change in taxes: I quit my day job in January and started working for myself . Though this decision was drastic, I did not make it on my own, nor did I make it with complete disregard to our financial future.
Four and a half years ago I started my blog by moonlighting . At the same time, I began writing for other blogs (including here!). Over the years I have learned a lot about blogging, built a network of blogging and tech friends, and worked on the craft of writing. When I knew that I wanted to try and make a go of it, I kept it to myself for six months. Then I got up the courage to talk to my husband, and we had several honest conversations about the likelihood of my success, our finances, and our feelings. Once we were on the same page (and had run the numbers ), it took several more months for me to take the plunge and tell my boss.
Taking the plunge—having the courage to let go of a steady paycheck and tell my boss and co-workers of my decision—was as difficult as it was exhilarating. Eight months later, I can say that it was exactly the right decision for me. But things have changed. Along with no longer having coworkers whom I see in person, or steady pay, or a commute, I also have changes to the way that I need to pay my taxes. You see, generally speaking, no taxes are taken out of any of my sources of income.
This is where estimated taxes  come in.
What are Estimated Tax Payments?
I earn income by staff writing for other blogs and making money with my blog  selling advertisements, earning commissions on affiliate products and services, and selling eBooks. None of this extra income  is subject to tax withholding (like the kind you would see a normal paycheck). The IRS works on a pay-as-you-go system, so you are supposed to pay taxes as you earn income rather than all at once at the end of the year.
How Often do Estimated Tax Payments Need to be Paid?
Estimated taxes are generally referred to as quarterly estimated taxes. However, they are not due exactly three months apart. Estimated tax payments are due:
- April 15th
- June 15th
- September 15th
- January 15th
Who Has to Pay Estimated Tax Payments?
If you do not have taxes withheld due to being self-employed, or from receiving income from interest, dividends, alimony, rent, gains from the sale of assets, prizes and awards, then you likely need to file estimated taxes. Know also that if your employer does not withhold enough taxes, you may need to pay estimated taxes as well.
Those of you who file as a sole proprietor, partner, S corporation shareholder, and/or a self-employed individual generally have to make estimated tax payments if you expect to owe tax of $1,000 or more when you file your return. Last year I wasn’t sure if I would meet this tax threshold (based on my income from the previous several years). If you are in the same boat, you can fill out 1040-ES: Estimated Tax for Individuals  in order to see if you will need to fill out estimated taxes or not. When figuring your estimated tax for the current year, it can be helpful to use your income, deductions, and credits for prior year as a starting point. The two most important lines on your prior tax returns on Form 1040 are lines 62 (total tax) and 63 (withholding).
What Happens If I Don’t Pay My Estimated Taxes?
Even if you are supposed to receive a tax refund, if you do not pay enough tax by each of the due dates above, then you may be charged a penalty. You generally will not be assessed a penalty if:
- You owe less than $1,000 in taxes 
- or if you paid at least 90% of the tax for the current year
- or if you paid 100% of the tax shown on the return for the prior year (whichever is smaller)
Also, if you failed to make the payment due to a casualty, disaster or other unusual circumstances, or if you retired/became disabled and there is a reasonable cause for not paying, then you may not be given a penalty. Fill out Form 2210  to get out of a penalty if any other reasons listed are why you did not pay on time.
The easiest way for you to send in payments for your estimated quarterly taxes is through the Electronic Federal Tax Payment System (EFTPS) . Using this system, you can pay your estimated quarterly taxes weekly, bi-weekly, or monthly, so long as by the due date all of the estimated taxes are paid for that quarter. For further information, see Publication 505 Tax Withholding and Estimated Tax.