If you’re self-employed, earn income without withholding (like rental income, freelance gigs, or dividends), or run an S-corp, the IRS expects you to pay as you go—not just once a year. That means calculating and paying estimated taxes quarterly.

To calculate your estimated taxes, use IRS Form 1040-ES. The form includes a worksheet that helps estimate your income, deductions, credits, and taxes due. But if your income fluctuates or you're unsure of your actual tax liability, you can rely on one of the IRS's two safe harbor rules to avoid penalties:

• Pay 100% of last year’s total tax bill (110% if your adjusted gross income exceeded $150,000)

• OR pay at least 90% of your current year’s estimated tax liability.

Quarterly estimated payments are due on:

• April 15

• June 15

• September 15

• January 15 (of the following year)

If the due date falls on a weekend or holiday, it shifts to the next business day.

How to Track Your Estimated Payments Like a Pro

Use Zoho Expense to meticulously manage every dollar you spend. Here’s how:

• Tag all estimated tax payments under a category like “IRS Payments – Quarterly” with a custom tag for the quarter (e.g., “Q1 2025”).

• Attach proof of payment (PDFs, bank receipts) to each entry in Zoho Expense for audit protection.

• Reconcile your entries monthly with your business bank account or Zoho Books.

• Use Zoho’s built-in reporting tools to ensure you’ve made all four quarterly payments on time.

Tracking this way not only makes you bulletproof in the event of an IRS audit—it also makes preparing your year-end return faster and more accurate.

IRS Audit-Ready Documentation Tips

To stay compliant and audit-ready:

• Save bank statements, payment confirmations, and digital copies of each IRS payment.

• Match payment dates to IRS due dates using your Zoho Expense audit trail.

• Keep Form 1040-ES worksheets in your Zoho WorkDrive or secure client portal.

• Record any correspondence with the IRS in a centralized document folder.

Avoiding Penalties

Missed a payment or underestimated your taxes? The IRS could hit you with penalties:

• Failure to Pay Proper Estimated Tax Penalty—calculated by how much you underpaid each quarter, multiplied by an IRS-determined interest rate.

• Use Zoho Expense to catch underpayments early by tracking actual payments vs. planned estimates.

Turbo Tips for Success

• Don’t just rely on your gut. Use Zoho Expense reports to compare actual income vs. projections.

• Set up recurring reminders inside your Zoho CRM or calendar for quarterly payment deadlines.

• Consider increasing wage withholding or adjusting your estimated payments if income rises sharply mid-year.