Summer is prime time for tax slip-ups, and one IRS mistake could cost taxpayers.
Many gig workers, freelancers and small business owners don’t make their quarterly estimated tax payments, resulting in IRS penalties and interest. With the third-quarter deadline on Sept. 15 approaching, now’s the time to get ahead.
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Avoiding this IRS mistake can help taxpayers save money and reduce stress well before tax season arrives.
The Costly IRS Mistake Millions Make
Missing an IRS quarterly tax payment during the summer may not seem like a significant issue, but it can quickly become a burden on your finances.
The IRS charges a late payment penalty and interest, which can turn a small oversight into a big bill. While quarterly estimated tax payments are designed to keep taxpayers on track, many gig workers don’t realize how easy it is to make this mistake when seasonal distractions are high.
“Especially if gig workers are coming from an environment where they were employees and the employer took care of reporting withholding to the IRS,” said Mark Luscombe, a principal analyst at Wolters Kluwer.
Understanding that these payments are required, regardless of prior experience making them, is the first step to staying compliant and avoiding costly summer mistakes.
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Who Needs To Make Estimated Tax Payments
Quarterly estimated tax payments aren’t just for full-time freelancers, and summer is a common time for taxpayers to overlook them. Anyone earning untaxed income, from side hustles to investment gains, may be required to report and pay taxes to the IRS.
Deadlines are not evenly spaced, which can make them easy to miss, leading to financial mistakes.
“While they are called quarterly payments, they are not due neatly at the end of each quarter,” Luscombe said. “The April payment is due after the first quarter; however, the June payment is due only two months later before the second quarter is over.”
Knowing these irregular deadlines helps taxpayers avoid accidental noncompliance and penalties.
The Real Cost of a Late IRS Payment
Missing a quarterly estimated tax deadline in the summer can set off a chain reaction that’s both expensive and stressful. The IRS charges a 0.5% monthly penalty, plus interest on the unpaid amount, which compounds until the balance is paid in full. These mistakes during the summer months often lead to higher costs later in the year.
“Accrued interest means that charges compound until paid in full,” said Linda Jensen, a certified exit planning advisor and wealth manager at Heart Financial Group. “Potential audit triggers happen, and repeated underreporting of 1099 income can invite scrutiny.”
Jensen added, “Even if your total liability is manageable, failing to make timely payments can lead to hundreds or thousands of dollars in avoidable penalties. For gig workers relying on every dollar, that’s a painful hit.”
To avoid these costs, Jensen recommends scheduling payments in advance through the IRS Direct Pay or the Electronic Federal Tax Payment System and setting reminders to ensure deadlines are never missed.
Why the Sept. 15 Estimated Tax Deadline Matters
Quarterly estimated tax payments help taxpayers stay in good standing with the IRS and prevent a year-end cash crunch, but summer deadlines are easy to overlook.
While the third-quarter deadline on Sept. 15 often catches gig workers off guard, it is not the only date to watch. The so-called summer payment deadline in June is also a frequent trouble spot.
“The so-called ‘summer’ payment, which covers income earned in April and May, is payable in mid-June, which is easy to miss,” said Sherman Standberry, certified public accounts (CPA) and managing partner at My CPA Coach.
To avoid penalties, taxpayers should mark all four annual deadlines — April, June, September, and January — in their calendar with reminders set well in advance. This ensures no payment slips through the cracks and helps avoid penalties and interest that accumulate over time.
How To Avoid Missing a Quarterly Tax Payment
Avoiding penalties starts with a system that removes guesswork and limits the chance of forgetting a deadline, especially during the summer when mistakes are more common. Simple organization tools can prevent oversights and help taxpayers stay compliant year-round.
“Make it boring and automatic,” said Stephen Weisberg, principal attorney and founder at The W Tax Group. “Treat your estimated payments like a non-negotiable bill that has to be made, no questions asked.”
He explained, “Every time you get paid, take 30% and put it in a separate bank account set up specifically for taxes. Then set up calendar events for quarterly due dates with multiple reminders. Don’t leave these payments up to memory and willpower.”
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This article originally appeared on GOBankingRates.com: Stop Making This IRS Mistake That Could Cost You Big This Summer
