As tax season enters its final month, most taxpayers are starting to get a handle on how much tax they'll owe. For the vast majority of taxpayers, the money they have that's withheld from their paychecks is enough to ensure that they'll satisfy the IRS, and many will even get money back in the form of a tax refund.

However, there are many taxpayers who don't have money withheld from paychecks at work, and for them, it's often necessary to make estimated tax payments in order to avoid onerous interest and penalties. That might sound complicated, and in some cases, it is. However, thanks to some special rules, many taxpayers are able to use a simple method to figure out whether they have to make estimated tax payments and if so, how much to pay.

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The rules governing estimated tax payments

The rules governing the IRS require taxpayers to make tax payments throughout the course of the year. For most people, job income makes up the vast majority of what they make, and the requirement that employers withhold federal income tax from their employees' paychecks is designed to ensure that most workers have enough of their money go toward prepaying their taxes that they typically won't have to worry about estimated tax payments.

However, there are several reasons why you might have to deal with the estimated tax payment rules:

• Some workers don't have enough tax withheld through payroll withholding to cover the required portion of their tax liability.
• If you're self-employed, then you don't have an employer to withhold taxes on your behalf. Instead, it's up to you to figure out what your self-employment income will be and make tax payments throughout the year to cover it.
• If you no longer work but have income from investments, retirement accounts, or other taxable sources, then there's no convenient mechanism in most cases to have taxes withheld. That leaves estimated tax payments as the only good option.

How much tax is enough?

In determining whether you need to make estimated tax payments, the IRS follows several different rules. First, if your tax bill will be less than $1,000 at the end of the year, then you won't owe any penalties for underpaying your taxes over the course of the year, and so you don't need to make estimated tax payments.

In addition, if you pay at least 90% of your current year tax bill through withholding, then you won't owe a penalty. That's true even if your taxes are high enough so that remaining amount exceeds $1,000. That threshold was dropped to 85% for the 2018 tax year, because of the complications related to tax reform and all the new rules that came into existence.

Finally, even those who don't meet those requirements can take advantage of a third possibility. If you have tax withheld that's at least 100% of what you ended up paying in total taxes last year, then you're generally able to avoid penalties. For those who have incomes exceeding $150,000, that amount goes up to 110% of your previous year's tax bill. That's especially helpful if your taxes last year were unusually low, as it prevents you from paying penalties that you'd otherwise owe in the other situations described above.

When should I make quarterly estimated tax payments, and what if I don't?

Quarterly estimates are due four times a year, as their name suggests. The first is due on April 15 with your tax return for the previous tax year. Subsequent payments are due on June 15, Sept. 15, and Jan. 15 of the following year.

The price of not making estimated tax payments when you're required to is a penalty. The penalty amount depends on prevailing interest rates and how much estimated tax you should have paid. Rates were 4% during the first quarter of 2018, 5% for the remainder of 2018, and 6% for the first quarter of 2019. Calculating the penalty gets complicated, because it's charged on a daily basis depending on how late you are in getting the tax paid. In addition, there are some alternative calculation methods that can reduce your penalty amount in some cases.

Don't pay taxes you don't have to pay

If you discover this year that you should've paid estimated tax payments, it's generally too late to fix the past, but you can make sure you do things right going forward. By making estimated tax payments starting this April, you should never have to pay underpayment penalties again.