How to Estimate Self-Employment and Payroll Taxes Using 1040-ES Worksheet

Quarterly taxes can catch many self-employed earners off guard, especially when income varies from project to project. Yet the IRS provides a simple way to stay ahead — Form 1040-ES. This form and its worksheet help estimate federal income and self-employment taxes, so payments stay on track and penalties are less likely.

The process involves totaling your projected income, deductions, and credits, then calculating self-employment tax and dividing it into four quarterly payments. If your income shifts, you can update your estimates at any time.

Freelancers, contractors, and gig workers can also use their prior-year return as a starting point. Here’s how to use the 1040-ES worksheet to plan smarter, manage quarterly payments with confidence, and maintain a steadier cash flow through the year.

What Estimated Tax Covers and When to Pay It

Estimated tax combines two main payments: federal income tax on your business profit and self-employment tax, which includes Social Security and Medicare contributions. You generally need to make quarterly payments if you expect to owe at least $1,000 after subtracting any withholding and credits.

Freelancers, gig workers, independent contractors, and single-member LLC owners typically fall under this rule because their income isn’t taxed automatically.

Form 1040-ES helps calculate both taxes in one step. You’ll multiply your net earnings by 92.35%, then by 15.3%, which covers Social Security and Medicare up to the annual wage base cap. The total is divided into four equal installments to spread payments through the year. Staying current helps you avoid penalties even if you later qualify for a refund.

2025 Q4 + 2026 Quarterly Deadlines & Ways to Pay

Payment Period	Due Date	Notes
Sep 1–Dec 31, 2025	Jan 15, 2026	Final 2025 payment — you can skip this one if you file your 2025 return and pay in full by Feb 2, 2026.
Jan 1–Mar 31, 2026	Apr 15, 2026	First 2026 payment.
Apr 1–May 31, 2026	Jun 15, 2026	Second 2026 payment.
Jun 1–Aug 31, 2026	Sep 15, 2026	Third 2026 payment.
Sep 1–Dec 31, 2026	Jan 15, 2027	Fourth 2026 payment — skip if you file your 2026 return and pay by Jan 31, 2027.

Ways to Pay Quarterly Taxes

✅ Direct Pay: Free bank transfer through the IRS website. Choose “1040-ES” as the form.

✅ IRS2Go App: Pay directly from your phone using Direct Pay or a debit or credit card.

✅ EFTPS: Best for business owners or recurring payments; requires enrollment.

✅ Mail-in Voucher: Use the payment voucher from Form 1040-ES and include a check or money order.

Always keep confirmation numbers, receipts, or certified-mail proofs. These help reconcile your payments when you file your annual return.

Use the 1040-ES Worksheet Step-by-Step

Form 1040-ES comes with a worksheet that helps estimate your income, deductions, and self-employment tax for the year. You’ll need last year’s tax return and a reasonable forecast of your 2025 income to get started. The IRS recommends beginning with your prior return, then updating the numbers for the current year.

Step-by-Step Worksheet Guide

Step 1: Estimate your adjusted gross income (AGI).

Enter your expected business profit, wages, interest, dividends, and other income on Line 1 of the worksheet. Subtract eligible adjustments such as SEP-IRA contributions or other deductible expenses.

Step 2: Account for credits and other taxes.

On Lines 7–10, include any refundable or nonrefundable credits, plus additional taxes like the Net Investment Income Tax or Additional Medicare Tax. These can increase or reduce your total estimated payments.

Step 3: Add self-employment tax.

Complete the Self-Employment Tax and Deduction Worksheet. Then transfer your total self-employment tax from Schedule SE to Line 9 of Form 1040-ES.

Step 4: Subtract withholding and divide by four.

After subtracting any withholding from paychecks or other sources, divide the remaining balance by four to get your quarterly payment amount. If your income changes during the year, redo the worksheet for the next quarter to stay aligned with IRS safe-harbor rules.

Quick Self-Employment Tax Example

Review these steps each quarter if your income outlook changes. Adjusting early helps keep payments accurate and minimizes the chance of penalties at filing time.

How to Stay Penalty-Safe

The IRS offers several ways to avoid underpayment penalties, even if your income fluctuates through the year. These “safe-harbor” rules help you stay compliant as long as you meet certain payment thresholds or keep your balance due below a specific amount at filing time.

Key Safe-Harbor Rules

✅ Meet the IRS safe-harbor thresholds. You can generally avoid penalties if your total estimated payments and withholding by January 15 meet one of these:

✅ Stay under the $1,000 balance rule. Even without meeting a safe harbor, you won’t owe a penalty if your balance due after credits and withholding is below $1,000 when you file your return.

✅ Use withholding to fill gaps. Withholding is treated as if paid evenly throughout the year. Increasing federal withholding on your paycheck or pension using Form W-4 or W-4P can help you reach a safe-harbor threshold without sending extra estimated tax payments.

✅ Recalculate quarterly if income changes. If your profit varies during the year, re-run the 1040-ES worksheet for the next quarter. Updating your estimates helps align payments with actual income and keeps you within a safe-harbor range.

📝 Note: Keeping these rules in mind and adjusting your payments when income shifts can help you stay compliant, avoid penalties, and manage cash flow more smoothly throughout the year.

Final Thoughts

Staying on top of quarterly payments begins with consistent recordkeeping and timely updates to your Form 1040-ES worksheet. Reviewing your profit, deductions, and credits before each due date helps ensure your payments reflect your actual tax outlook and remain within IRS safe-harbor limits.

Using online payment options such as IRS Direct Pay, EFTPS, or the IRS2Go app can speed up processing and provide instant confirmation numbers. Keep electronic receipts or certified-mail records with your bookkeeping for easy reconciliation at tax time and to document proof of payment if needed.

With regular check-ins and a clear system for adjustments, estimated tax payments can become a manageable and predictable part of running a self-employed business.

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