Why are estimated taxes due “early” for the 2nd and 3rd quarters only?
There are too many nuances to the question asked to explore fully but here are a few points to keep in mind. If you are a cash-basis taxpayer (most individuals are), then you are not required to pay taxes on the money that has been billed but not received as yet.  If you operate on an accrual basis, then the income accrues to you the day you perform the service and not on the day you bill the client. You can make four equal payments of estimated tax on the due dates, and if these (together with any income tax withholding from wage-paying jobs) are at least 90% of your tax liability for that year, then you owe no penalties for underpayment of tax regardless of how your income varied over the year. If your income does vary considerably over the year (even for people who only have wages but who invest in mutual funds, the income can  vary quite a bit since mutual funds typically declare dividends and capital gains in December), then you can pay different amounts in each quarterly installment of estimated tax. This is called the annualization method (a part of Form 2210 that is best avoided unless you really need to use it).  Your annualized income for the payment due on June 15 is 2.4 = 12/5 times your taxable income through May 31. Thus, on Form 2210, you are allowed to assume that your average monthly taxable income  through May 31 will continue for the rest of the year. You then compute the tax due on that annualized income and you are supposed to have paid at least 45% of that amount by June 15. Similarly for September 15 for which you look at income through August 31, you use a multiplier of 1.5 = 12/8 and need to pay 67.5% of the tax on the annualized income, and so on.  If you miscalculate these numbers and pay too little tax in any installment, then you owe penalties for that quarter.  Most people find that guesstimating the tax due for the entire year and paying it in equal installments is simpler than keeping track of nuances of the annualized method. Even simpler is to pay 100% of last year's tax in four equal installments (110% for high earners) and then no penalty is due at all. If your business is really taking off and your income is going to be substantially higher in one year, then this 100%/110% of last year's tax deal could allow you to postpone a significant chunk of your tax bill till April 15. Here's an answer copied from  https://www.quora.com/Why-is-the-second-quarter-of-estimated-quarterly-taxes-only-two-months Estimated taxes used to be paid based on a calendar quarter, but in   the 60's the Oct due date was moved back to Sept to pull the third   quarter cash receipts into the previous federal budget year which   begins on Oct 1 every year, allowing the federal government to begin   the year with a current influx of cash. That left an extra month that   had to be accounted for in the schedule somewhere.  Since individuals   and most businesses report taxes on a calendar year, the fourth   quarter needed to continue to end on Dec 31 which meant the Jan 15 due   date could not be changed, that left April and July 15 dues dates that   could change.  April 15 was already widely known as the tax deadline,   so the logical choice was the second quarter which had its due date   changed from July 15 to June 15. I suspect that the payments were originally due near the end of each quarter (March 15, June 15, September 15, and December 15) but then the December payment was extended to January 15 to allow for end-of-year totals to be calculated, and then the March payment was extended to April 15 to coincide with Income Tax Return filing.
Aswath Damodaran's [Investment Valuation 3rd edition](http://www.amazon.com/Investment-Valuation-Techniques-Determining-University/dp/1118130731/ref=sr_1_12?ie=UTF8&amp;qid=1339995852&amp;sr=8-12&amp;keywords=aswath+damodaran) (or save money and go with a used copy of the [2nd edition](http://www.amazon.com/gp/offer-listing/0471414905/ref=dp_olp_used?ie=UTF8&amp;condition=used))  He's a professor at Stern School of Business. His [website](http://pages.stern.nyu.edu/~adamodar/) and [blog](http://aswathdamodaran.blogspot.com/) are good resources as well. [Here is his support page](http://pages.stern.nyu.edu/~adamodar/New_Home_Page/Inv3ed.htm) for his Investment Valuation text. It includes chapter summaries, slides, ect. If you're interested in buying the text you can get an idea of what's in it by checking that site out. If you have a one-time event, you are allowed to make a single estimated payment for that quarter on Form 1040-ES.  People seem to fear that if they make one such payment they will need to do it forevermore, and that is not true.  The IRS instructions do kind of read that way, but that's because most people who make estimated payment do so because of some repeating circumstance like being self-employed. In addition, you may qualify for one or more waivers on a potential underpayment penalty when you file your Form 1040 even if you don't make an estimated payment, and you may reduce or eliminate any penalty by annualizing your income - which is to say breaking it down by quarter rather than the full year.  Check on the instructions for Form 2210 for more detail, including Schedule AI for annualizing income.  This is some work, but it might be worthwhile depending on your situation. https://www.irs.gov/instructions/i2210/ch02.html "I had searched for GDP growth 2017 and that was the result. The first quarter of 2017 is the only full quarter since the election for which there are final estimates, but you cite the fourth quarter of last year, which you say was below ""last year's national average (a five year low),"" as evidence of what you had called a ""huge expansion"" since the election." In regards to the legal recourse, no there is none.  Also, despite your frustrations with Citi, it may not be their fault.  Mortgage companies are now forced to select appraisers (essentially at random) through 3rd party Appraisal Resource Companies (ARCs).  This randomization mandate from the government was issued in order to combat fraud, but it is really causing more trouble for homeowners because it took away appraiser accountability.  Basically, there's nothing we can do to fire an appraiser anymore.  I've had appraiser do terrible jobs, just blatantly wrong, and have gone the distance with the dispute process only to find they won't change the value.  My favorite real-life example came from an appraiser who got the bedroom count wrong (4 instead of 5); yet he took pictures of 5 bedrooms.  The one he excluded he stated it shouldn't count because it didn't have a closet.  Problem is, it DID have a closet.  I had the homeowner take pictures of all of the closets in his house, and send them in.  He still refused to change the count.  After close to 2 months of the dispute process, the ARC came in and changed the count, but did not chagne the value, stating that the room count didn't increase the sqft, and there would be no adjustment in value.  I was floored.  The only solution we had was to wait for the appraisal to expire, then order it again; which we did.  The new appraiser got the count right, and surprisingly (not really), it came in at the right value... In regards to the value necessary to avoid MI, they are likely using 80%, but it's not based on your current balance vs the value, it's based on the new loan amount (which will include costs, prepaids, skipped mortgage payments, etc) vs the value. Here are your options: Get a new appraisal.  If you are confident the value is wrong, go somewhere else and get a new appraisal. Restructure the loan.  Any competent Loan Officer would have noticed that you are very close to 80%, and should have offer you the option of splitting the mortgage into a 1st and 2nd loan.  Keeping the first loan at 80%, and taking out a 2nd for the difference would avoid MI. Best Regards, Jared Newton "See Publication 505, specifically the section on ""Annualized Income Installment Method"", which says: If you do not receive your income evenly throughout the year (for example, your income from a repair shop you operate is much larger in the summer than it is during the rest of the year), your required estimated tax payment for one or more periods may be less than the amount figured using the regular installment method. The publication includes a worksheet and explanation of how to calculate the estimated tax due for each period when you have unequal income.  If you had no freelance income during a period, you shouldn't owe any estimated tax for that period. However, the process for calculating the estimated tax using this method is a good bit more complex and confusing than using the ""short"" method (in which you just estimate how much tax you will owe for the year and divide it into four equal pieces).  Therefore, in future years you might want to still use the equal-payments method if you can swing it.  (It's too late for this year since you missed the April deadline for the first payment.)  If you can estimate the total amount of freelance income you'll receive (even though you might not be able to estimate when you'll receive it), you can probably still use the simpler method.  If you really have no idea how much money you'll make over the year, you could either use the more complex computation, or you could use a very high estimate to ensure you pay enough tax, and you'll get a refund if you pay too much." "Your question does not say this explicitly, but I assume that you were once a W-2 employee.  Each paycheck a certain amount was withheld from your check to pay income, social security, and medicare taxes.  Just because you did not receive that amount of money earned does not mean it was immediately sent to the IRS.  While I am not all that savvy on payroll procedures, I recall an article that indicated some companies only send in withheld taxes every quarter, much like you are doing now.  They get a short term interest free loan.  For example taxes withheld by a w-2 employee in the later months of the year may not be provided to the IRS until 15 January of the next year.   You are correct in assuming that if you make 100K as a W-2 you will probably pay less in taxes than someone who is 100K self employed with 5K in expenses.  However there are many factors.  Provided you properly fill out a 1040ES, and pay the correct amount of quarterly payments, you will almost never owe taxes.  In fact my experience has been the forms will probably allow you to receive a refund.  Tax laws can change and one thing the form did not include last year was the .9% Medicare surcharge for high income earners catching some by surprise.    As far as what you pay into is indicative of the games the politicians play.  It all just goes into a big old bucket of money, and more is spent by congress than what is in the bucket.  The notion of a ""social security lockbox"" is pure politics/fantasy as well as the notion of medicare and social security taxes.  The latter were created to make the actual income tax rate more palatable.     I'd recommend getting your taxes done as early as possible come 1 January 2017.  While you may not have all the needed info, you could firm up an estimate by 15 Jan and modify the amount for your last estimated payment.  Complete the taxes when all stuff comes in and even if you owe an amount you have time to save for anything additional.  Keep in mind, between 1 Jan 17 and 15 Apr 17 you will earn and presumably save money to use towards taxes.  You can always ""rob"" from that money to pay any owed tax for 2016 and make it up later. All that is to say you will be golden because you are showing concern and planning.  When you hear horror stories of IRS dealings it is most often that people spent the money that should have been sent to the IRS." I've actually had the same problem several years running, and it's solved by filing my corporate taxes, then taking those schedules, and applying them to my 1040, along with a Schedule C  You'll want to work with an accountant on this, but basically you're going to take the total set of business expenses as 1 chunk, then write them off your income (as one chunk).  I always recommend an accountant for this, but that's the general idea that I've used, and for the last 10 years, it's worked great. You must pay your taxes at the quarterly intervals. For most people the withholding done by their employer satisfies this requirement. However, if your income does not have any withholding (or sufficient), then you must file quarterly estimated tax payments.  Note that if you have a second job that does withhold, then you can adjust your W4 to request further withholding there and possibly reduce the need for estimated payments.  Estimated tax payments also come into play with large investment earnings. The amount that you need to prepay the IRS is impacted by the safe harbor rule, which I am sure others will provide the exact details on.