Introduction: Stop Stressing Over Quarterly Taxes
Do quarterly taxes make you nervous, or do they get ignored until a scary letter arrives. If you’re self-employed in Texas, those four little deadlines can make—or break—your cash flow. The good news: once you understand the rhythm, estimated payments feel less like penalties and more like guardrails. Ready to make quarterly taxes boring—in a good way
Why This Matters for Texas Freelancers and Small Businesses
Because there is no employer withholding, the IRS expects you to pay as you earn. If you miss the rhythm, underpayment penalties may apply—even if you pay everything by April. Texas realities include seasonal work, irregular invoices, sales tax in certain industries, and franchise tax for entities. A simple, Texas-smart plan for estimated taxes keeps cash flow steady, reduces surprises, and helps you sleep.
The Plain English Answer
Quarterly estimated taxes are prepayments toward your annual federal income and self-employment taxes. If you expect to owe $1,000 or more, you probably need to make estimates. Payments are due April, June, September, and January; the calendar is quirky. You can pay based on last year’s tax safe harbor, this year’s income as it comes in using the annualized method, or a flat estimate based on projected income. The right method depends on whether your income is steady or seasonal.
Know Your Tax Pieces
You must account for a few different components:
- Federal income tax on net business profit (profit equals income minus expenses).
- Self-employment tax for Social Security and Medicare on that same net profit (roughly 15.3 percent, half deductible on your return).
- Additional taxes that may apply, like the 0.9 percent Additional Medicare tax if your income crosses thresholds, and sometimes the 3.8 percent Net Investment Income Tax on passive income (not business profit for most self-employed).
While Texas does not have a personal income tax, you may still deal with Texas sales tax if your goods or services are taxable, and your entity may owe Texas franchise tax or at least file a no-tax-due report. Those are separate from federal estimated tax, but they matter for cash planning.
Pick a Calculation Method That Fits Your Year
You have three primary methods to avoid penalties:
- Safe Harbor Method: Pay at least 100 percent of last year’s total tax (or 110 percent if your adjusted gross income was over $150,000), split across the four due dates. Do this and you will generally avoid underpayment penalties, even if this year runs hotter than last. This is great when income is steady.
- Current Year Method: Estimate this year’s total tax and divide by four. This works when you have a good budget and stable margins. It is riskier if you grow fast, since a hot fourth quarter can leave you short.
- Annualized Income Method: Perfect for seasonal pros. You compute tax each quarter based on what you actually earned to date, then pay accordingly. A wedding photographer or construction firm with heavy spring and fall might love this. It reduces or eliminates penalties because your payments track your income pattern.
A Simple Way to Estimate Without a Headache
Start with last year’s Schedule C or business K-1, and adjust for obvious changes (new clients, price increases, or a downshift). Subtract ordinary and necessary expenses you expect to incur; be honest, and include software, insurance, equipment, mileage, home office, subcontractors, and professional fees. Apply an estimated tax rate. Many freelancers use 25 to 30 percent of net profit as a quick blended rate for federal income and self-employment tax. If you have high deductions or family credits, your rate may be lower. Divide the annual number by four for a baseline. If you are seasonal, shift more to the quarters when cash comes in, or use the annualized method. Set a recurring transfer to a separate tax savings account every time you get paid. Sweeping 25 to 30 percent of profit into that bucket right away is the calmest way to make quarterly payments on time.
Know Your Deadlines and How to Pay
April 15, for income earned January through March
June 15, for April and May
September 15, for June through August
January 15 of the next year, for September through December
If the date falls on a weekend or holiday, the due date moves to the next business day. Pay online through IRS Direct Pay from your bank account, or through EFTPS if you prefer a portal with history. Keep confirmations in your year folder. If you file jointly, make sure payments are tied to the correct Social Security number to avoid confusion at filing time
Real Texas Examples to Make It Concrete
The Austin freelance designer. Last year’s net profit was $80,000. Using a 25 percent blended rate, target tax is $20,000. Divide by four, $5,000 each quarter. Cash is lumpy, so she sweeps 30 percent of every client payment into a tax savings account and pays the quarterly from that bucket. When Q3 runs slow, she still pays on time, then tops up Q4 after a big project closes.
The Houston food truck owner, S corporation. The owner takes a reasonable salary through payroll, which handles withholding. The business still shows profit above salary, which flows through on a K-1. The owner sets estimates on the K-1 profit only, since payroll withholding already covers tax on the W-2 wages. Quarterly payments are smaller, but still matter.
Tie in Sales Tax and Franchise Tax Without Confusion
Sales tax you collect on taxable sales is a trust tax; it is not your income. Deposit it in a separate liability clearing account and remit by the Comptroller’s deadline, often monthly or quarterly based on volume. Do not use sales tax to fund operations; that is how businesses get into trouble. Texas franchise tax, if owed, is usually due in May for most entities. Plan cash for it separately from federal estimates. A simple monthly cash flow sheet with lines for federal estimates, sales tax, and franchise tax keeps surprises off your plate.
What If You Fell Behind
Do not freeze. Make the next payment date. You can also make catch-up payments between deadlines. The IRS computes penalties per quarter, so paying sooner usually reduces them. When you file the return, you or your CPA can run Form 2210 to annualize and minimize penalties if your income was uneven. If you truly cannot pay the full estimate, pay what you can, on time; it signals good faith and lowers penalty amounts. Then adjust your savings habit so you are ready for the next due date.
Why This Helps Cash Flow, Not Just Taxes
Quarterly payments act like a budget for your profit. When tax money sits in a separate account, you make cleaner spending decisions. Your operating account stops lying to you. Big months feel big, but not reckless, because a chunk slides out to the tax bucket automatically. Slow months hurt less, because you are not raiding the tax money to cover inventory or ads. Owners who build this habit report lower stress and fewer emergency calls to their CPA in April. That is the real win.
Make It Simple, Make It Sticky
Open a separate high-yield savings account labeled Taxes. Sweep your percentage the day client money lands. Put all four due dates on your calendar with reminders two weeks ahead. Use your bookkeeping software to run a year-to-date profit and loss before each payment. If profit is way higher than you expected, increase the payment. If it is lower, adjust down, but do not skip. Keep a one-page cheat sheet with your percentages, logins, and a simple example. When you are busy, you do what is easy. Make it easy.
Where Professional Help Fits Without Pressure
A 30-minute quarterly check-in with a CPA can pay for itself. You get a quick look at year-to-date profit, an updated estimate, and a chance to ask about new deductions, retirement contributions, or credits. If you are moving from sole proprietor to S corporation, or if your income is swinging wildly, that short call can be the difference between a calm April and a scramble. If you prefer to set and forget, ask your CPA to prepare annualized vouchers that match your seasonality. Then just pay what is printed and keep your books tight.
A Calm Way to Finish
Quarterly taxes are a rhythm, not a riddle. Pick a method that matches how you earn. Save as you go. Pay on the four dates. Keep your books current so your numbers are real, not guesses. If you miss, do not panic. Catch up and keep moving. With a few steady habits, you will trade fear for a routine, which is exactly what you need when your business already asks for so much of you.
