In November, I suddenly paused while looking at my bank balance. I had received quite a bit of freelance work this year, but the money set aside for taxes was less than I expected.

With a regular salary, taxes are withheld, so there's not much to worry about. However, for 1099 income earned on the side, no one withholds taxes for you.

That's why self-employed individuals or freelancers need to pay estimated taxes four times a year. Today, I want to summarize the last one, which is for the fourth quarter.

First, let's talk about the dates. The deadline for the estimated taxes for the fourth quarter of the 2026 tax year is January 15, 2027.

Despite its name, the fourth quarter covers four months of income from September 1 to December 31, not three months. The deadlines for the first three quarters were April 15, June 15, and September 15.

When I first learned this, I felt a bit unfair. For those with a lot of income at the end of the year, the last payment is the heaviest.

The calculation is surprisingly straightforward. First, you calculate the self-employment tax, then add the income tax.

The self-employment tax rate is 15.3%. This is the sum of 12.4% for Social Security and 2.9% for Medicare.

However, it doesn't apply to the entire net profit but only to 92.35% of it. If your net income is less than $400, there's no self-employment tax.

The Social Security tax cap for 2026 is $184,500, which is an increase from $176,100 in 2025. Income above this threshold is not subject to the 12.4%, but the 2.9% Medicare tax continues without a cap.

For example, let's say your net profit this year is $60,000. Multiplying $60,000 by 92.35% gives you $55,410.

Multiplying that by 15.3% results in a self-employment tax of $8,477.73. It's quite striking when you see it in numbers, right? And we haven't even started on the income tax yet.

Next is the federal income tax. Half of the self-employment tax is deductible from your income, so you subtract that and then apply the standard deduction and tax brackets.

This part varies for each person due to different incomes and deductions, so it doesn't fall into a neat formula. That's why I just use the simulation feature of a tax program. Ever since I made a mistake calculating the brackets by hand, I prefer this method.

In fact, what's more important than the exact amount is the threshold to avoid penalties. The IRS refers to this as the safe harbor.

If you've paid either 90% of this year's tax or 100% of last year's tax, whichever is less, by the deadline, you won't incur any underpayment penalties.

However, if last year's AGI was over $150,000 (or $75,000 for married individuals filing separately), the threshold increases to 110%. It's easy to get confused here because the reference is last year's income, not this year's.

For me, the 100% of last year's tax method is the easiest. You can find the total tax amount directly on last year's 1040 form. The biggest advantage is that you don't need to estimate this year's income in advance.

So, to summarize the calculation method for the fourth quarter in one line: subtract the estimated taxes and withholdings already paid this year from last year's total tax amount, and pay the remaining amount by January 15.

If you're working a job while doing side work, here's an extra tip. Withholdings are considered evenly distributed throughout the year, so you can also increase your withholding on your December paycheck using the W-4 form.

You also need to keep track of state taxes. In Missouri, if you expect to owe more than $100 in state income tax after withholdings and deductions, you're advised to pay estimated taxes using MO-1040ES.

The deadlines for Missouri are the same four times as for federal taxes, and the fourth quarter is also January 15, 2027. State tax brackets are adjusted every year, so it's safest to check the current numbers on the state tax department's forms.

If you have business income within Kansas City, there's also a 1% earnings tax. This is not quarterly but is reported annually using the RD-108 form by April 15.

According to city hall guidance, you must file the RD-108 even in years when you incur a loss. Surprisingly, many people overlook this. They remember to take care of federal and state taxes but forget about the city taxes.

Payments can be made through IRS Direct Pay or EFTPS. Federal payments are handled with 1040-ES, while state payments need to be processed separately through the Missouri Department of Revenue.

Honestly, keeping track of four deadlines a year is a hassle. Still, it's a hundred times better than paying everything at once in April along with penalties.

If I were you, I'd pull out last year's 1040 this week and calculate the remaining amount. Then, when income comes in early January, I'd set aside the tax and pay it before the 15th.

This article outlines a general calculation flow, so if your income structure is complex, the numbers may vary. If a significant amount is at stake, I recommend consulting a tax professional.