The primary purpose of estimated taxes is to provide the government with a steady stream of revenue throughout the year. This system helps taxpayers avoid large bills at the end of the year by requiring them to contribute as they earn income. By making regular payments, taxpayers can manage their cash flow more effectively and minimize the financial strain of a lump-sum payment at tax time.
Estimated taxes are a crucial component of the U.S. tax system for those without automatic withholding. Understanding the requirements and deadlines for these payments allows taxpayers to meet their obligations and avoid penalties over the course of the year.