If you have not already done so, now is the time to review your tax situation and make an estimated quarterly tax payment using Form 1040-ES. The second quarter due date for estimated taxes is now here.

Second quarter estimated taxes

You are required to withhold at least 90% of your 2025 tax obligation or 100% of your 2024 tax obligation. If your income is over $150,000 ($75,000 if married filing separately), you must pay 110% of your 2024 tax obligation to avoid an underpayment penalty. A quick look at your 2024 tax return and a projection of your 2025 tax obligation can help determine if a payment is necessary. Here are some other things to consider.

Additional tax considerations

• Avoid an underpayment penalty. If you do not have proper tax withholdings during the year, you could be subject to an underpayment penalty. The penalty can occur if you do not have proper withholdings throughout the year.
• W-2 withholdings have special treatment. You can make a W-2 withholding payment at any time during the year. It is treated as if it were made throughout the year. If you do not have enough to pay the estimated quarterly payment now, you may be able to adjust your W-2 withholdings to make up the difference.
• Self-employed workers need to account for FICA taxes. In addition to your income taxes, remember to also account for your Social Security and Medicare taxes. Creating and funding a savings account for this purpose can help avoid a possible cash flow hit each quarter when you pay your estimated taxes.
• Don’t forget state obligations. Estimated state tax payments are often also necessary if you have to for your federal taxes. There are, of course, a few exceptions to this rule at the state level. Consider conducting a review of your state obligations to ensure compliance with these quarterly estimated tax payments.

Contact our RRBB advisors if you have any questions or are ready to take the next step.