Federal estimated tax payments are due four times a year. The dates are April 15, June 15, September 15, and January 15 of the following year. California follows the same schedule. If a due date falls on a weekend or federal holiday, the deadline moves to the next business day.

Each payment covers income earned during a specific period. The April 15 payment covers January through March. June 15 covers April and May. September 15 covers June through August. And January 15 covers September through December. The periods aren’t evenly split, which trips people up.

If you’re a contractor, plumber, electrician, or any other self-employed trades business owner, estimated taxes are almost certainly something you need to deal with. Unlike W-2 employees who have taxes withheld from every paycheck, nobody is withholding anything for you. The IRS still expects to get paid throughout the year, not in one lump sum at filing time.

The general rule is that you need to make estimated payments if you expect to owe $1,000 or more in federal tax when you file. For California, the threshold is $500. Most trades business owners clearing any reasonable income will hit those numbers easily.

There are two safe harbors to avoid underpayment penalties. You can pay 90% of your current year tax liability across the four payments, or you can pay 100% of what you owed last year (110% if your adjusted gross income was over $150,000). The prior year method is simpler because it’s a known number. Divide last year’s total tax by four and send that amount each quarter. You might still owe at filing time, but you won’t get hit with penalties.

The penalties for missing payments aren’t enormous, but they add up. The IRS charges interest on underpaid amounts for each quarter you were short. It’s calculated daily from the due date until you pay. California applies its own penalties on top of that. Over a few quarters, you could easily be looking at hundreds of dollars in avoidable charges.

The biggest problem for trades businesses isn’t forgetting the dates. It’s not having the cash set aside when the payment is due. Revenue in construction and service businesses can be lumpy. A great month followed by a slow stretch means the money you should have set aside for taxes got spent on materials or payroll. A good habit is to move 25 to 30 percent of every payment you receive into a separate savings account dedicated to taxes. That way the money is there when the quarterly deadline arrives.

Having accurate books makes estimated payments much less stressful. When your bookkeeping for trades businesses is current, you can see actual profit numbers instead of guessing. That means your quarterly payments are based on real data, not a number you pulled out of the air hoping it’s close enough.

If your income varies significantly from quarter to quarter, you can use the annualized income installment method to adjust payments based on when you actually earned the money. This is more complex to calculate but can prevent overpaying during slow periods. Working with someone who handles tax strategy for trades businesses can help you figure out the right approach so you’re not sending more than necessary or falling short and triggering penalties.

The key dates again: April 15, June 15, September 15, January 15. Put them in your calendar now and treat them like any other bill that has to be paid on time.