If you’re self-employed or don’t have taxes withheld from other sources of taxable income, it’s up to you to periodically pay the IRS by making estimated tax payments.
Our tax system operates on a “pay-as-you-go” basis, which means the IRS wants its cut of your income when you earn it. For employees, the government gets paid through tax withholding each time you get a paycheck (the amount withheld is based on your Form W-4). Retirees can have taxes withheld from Social Security payments and retirement plan distributions, or even have taxes taken out of a required minimum distribution. However, if you’re self-employed or don’t have taxes withheld from other sources of taxable income (such as interest, dividends, capital gains, alimony, or rental income), it’s up to you to periodically pay the IRS by making estimated tax payments.
If you file your 2023 tax return by January 31, 2024, and pay the entire balance due with your return, then you don’t have to make the final payment due January 15.
You also don’t have to make estimated tax payments until you have income on which you will owe tax. So, for example, if you don’t have any taxable income in 2023 until June, you don’t have to make an estimated tax payment until October 15. At that point, you can either pay your entire estimated tax by the October 15 due date or pay it in two installments by October 15 and January 15.