June is an estimate month! Generally individuals and businesses must submit their income tax payments to the IRS and state agencies four times per year. There is an exception if your tax bill, after withholding and other payments, is less than $1,000. However, if you don't meet this or other exceptions then there can be penalties for not paying estimated tax payments. The penalty rate is similar to interest and is applied on a daily basis. Currently the penalty rate is 7%, so it is similar to paying 7% annually on a credit card. These penalties are usually calculated and paid with your tax bill at the end of the year. To calculate your estimated tax payments, calculate the tax due on your estimated taxable income for the year, subtract any withholding or other payments, and divide the result by four. This is the amount you should pay each quarter. There is also a safe harbor available, known as protective estimates, in case you cannot or don't want to estimate your current year's tax liability. The safe harbor is 100% of last year's tax liability, or 110% of last year's tax liability if your income was more than $150,000.  Protective estimates will prevent penalties on not paying estimated tax payments, even if you owe much more than you paid. Consult with your CPA for assistance calculating and paying estimated tax payments.