Day 7 : Quarterly Estimated Taxes: Are You on Track for Q3?

Sep 30

Today marks the end of Q3, which means your third quarterly estimated tax payment is due. If you're self-employed, earn investment income, or your employer doesn't withhold enough taxes, staying on track with estimated payments is crucial.

Who Needs to Pay Estimated Taxes?

You likely need to make estimated tax payments if:

You're self-employed or a business owner
You have significant investment income
You receive rental income
Your employer doesn't withhold enough tax
You expect to owe $1,000 or more in taxes for 2025

2025 Payment Due Dates

Q1: April 15, 2025 ✓
Q2: June 17, 2025 ✓ (extended due to holiday)
Q3: September 30, 2025 ← TODAY
Q4: January 15, 2026

Calculating Your Q3 Payment

Method 1: Current Year Estimate Calculate 25% of your expected 2025 tax liability, minus any withholding or previous estimated payments.

Method 2: Safe Harbor Rule Pay 25% of last year's total tax liability. This protects you from penalties even if you end up owing more.

Method 3: 110% Rule If your prior year AGI exceeded $150,000, pay 110% of last year's tax liability to avoid penalties.

Common Mistakes to Avoid

Forgetting State Taxes Don't forget to include state estimated tax payments in your calculations and payment schedule.

Not Adjusting for Income Changes If your income has increased significantly, your original estimate might be too low. Conversely, if income dropped, you might be overpaying.

Missing the Deadline Estimated tax payments are due on the actual due date, regardless of weekends or holidays (unless specifically extended).

What If You're Behind?

Make Up Payments You can still make your Q3 payment today to minimize penalties. The IRS typically charges interest and penalties on late payments.

Adjust Withholding If you have W-2 income, consider increasing withholding for the remainder of 2025 to catch up.

Plan for Q4 Even if you're behind, making your Q4 payment on time can help minimize additional penalties.

Planning for Q4 and Beyond

Review Your Income Has your income been higher or lower than expected? Adjust your Q4 payment accordingly.

Consider Year-End Strategies

Defer income to 2026
Accelerate deductions into 2025
Maximize retirement contributions
Harvest investment losses

Set Up Automatic Payments Consider setting up automatic payments through EFTPS (Electronic Federal Tax Payment System) to never miss a deadline again.

Working with a Professional

If estimated taxes feel overwhelming, consider working with a tax professional who can: