How do estimated quarterly taxes work for self-employed people?

Self-employed individuals must pay estimated taxes four times a year (April, June, September, January) because no employer withholds taxes from their paychecks. You calculate the estimate using Form 1040-ES, basing it on your expected annual income and self-employment tax. Underpaying can trigger an IRS penalty, so most people aim to pay at least 90% of the current year's tax or 100% of last year's tax.