How to file quarterly taxes: 2026 guide

Key takeaways

• The IRS requires some people to pay taxes as they earn income under a quarterly pay-as-you-go system.
• If it’s likely you’ll owe at least $1,000 in taxes for the year, you’ll generally have to make tax payments every quarter.
• Estimated tax payments follow fixed IRS deadlines, and missing them can trigger steep penalties.
• Many types of crypto activity create taxable income, including mining, trading, and traditional self-employment income.
• Tracking your crypto income throughout the year makes planning your quarterly taxes more accurate and reduces the risk of penalties.

Crypto activity has become part of everyday investing. But as your trading activity grows, so does your tax burden.

The Internal Revenue Service (IRS) quarterly payment system relies on paying taxes as you make money. Under IRS rules, crypto is considered property and taxed accordingly. So when crypto generates taxable income without automatic tax withholding, you might have to file quarterly taxes and make estimated payments as you keep earning. If you only expect taxes to come into play in April, this could lead to a surprisingly large tax bill.

In this article, we’ll explain when crypto holders need to file quarterly taxes, how to calculate what you owe, and how to stay compliant with the IRS as your crypto activity changes.

What are quarterly taxes?

Quarterly taxes, or estimated taxes, are part of the United States’ pay-as-you-go tax system. This system means taxpayers pay their income tax in four parts as they make money rather than all in one go at filing time. In theory, quarterly payments should prevent a large balance when you file your annual tax return.

Standard W-2 employees rarely have to worry about quarterly taxes because their employers handle withholding and transfers. But if you’re self-employed or a crypto investor, you act as your own employer. This means that you have to set aside a portion of your profits and send them to the IRS throughout the year. How much you pay is based on your income, which includes everything from staking rewards and mining payouts to trading gains and NFT sales.

What kinds of crypto income require quarterly taxes?

Crypto income taxes need to be paid quarterly when no one automatically withholds those taxes from your earnings. Under current IRS guidance, many crypto activities create taxable income as soon as you receive assets or realize gains, even without converting that crypto to fiat currency.

If you earn crypto in any of the following ways, you may need to make estimated quarterly tax payments:

• Staking: Tokens earned from staking count as taxable income based on their fair market value (FMV) when you establish control over the coins.
• Mining and validator rewards: Cryptocurrency earned through mining or block validation is taxable when you receive it, and is often treated specifically as income from performing services.
• Airdrops: Tokens from airdrops generally count as income once you can transfer, sell, or otherwise control them.
• Interest and yield: Crypto earned from lending platforms, saving products, or DeFi protocols is taxable as income when paid out.
• Liquidity provider rewards: Fees and token rewards from providing liquidity become taxable when you receive them, even if you don’t remove the original deposited crypto.
• Capital gains from trading: Selling, swapping, or spending cryptocurrency at a profit creates capital gains. If those gains mean you’ll owe at least $1,000 in taxes for the year, you’ll have to make estimated quarterly tax payments.
• NFT sales: Income from selling NFTs or earning creator royalties can generate taxable income or capital gains, depending on the transaction.
• Self-employment crypto income: Crypto earned through freelance work like consulting counts as taxable income and generally triggers quarterly tax obligations.

Who has to file quarterly taxes?

If you earn income and expect to owe at least $1,000 in federal taxes (after credits) without withholding taxes, the IRS requires you file quarterly taxes.

The people and organizations who generally fall into this category include:

• Crypto traders and investors who regularly make taxable gains during the year.
• Self-employed individuals or independent contractors whose income comes as digital assets instead of fiat paychecks.
• Businesses, partnerships, and other entities that earn crypto through their operations, services, or on-chain activities.

When are estimated tax payments due?

Since estimated taxes follow a quarterly schedule, each payment covers income earned during the period shown below. When a due date falls on a weekend or holiday, the IRS shifts the deadline to the next business day.

Here’s the IRS’s typical quarterly tax deadlines.

How do you calculate your estimated taxes? 3 steps

To calculate your quarterly tax payments, you’ll need to identify what crypto you made and apply the appropriate tax treatments. Form 1040-ES, which you’ll need to file for your estimated quarterly taxes, walks you through three steps to generate a number.

Group crypto income by tax category

Start by identifying all your taxable crypto activity during the year. The IRS sorts crypto income into two main categories for tax purposes:

• Ordinary income: Crypto earned through staking, mining, validator rewards, interest, airdrops, yield farming, and self-employment compensation.
• Capital gains: Income earned from selling, swapping, or otherwise disposing of an asset at a profit. Only realized gains count.

Ordinary income affects your marginal tax rates, while capital gains follow holding-period rules (whether you use short or long-term tax rates).

Determine the appropriate tax rates

You’ll need to apply ordinary income tax rates to your income (including what you’ve made from your crypto). These rates follow the standard federal income tax brackets, which currently range from 10% to 37%, depending on your filing status and total taxable income.

Capital gains are calculated separately. If you held them for a year or less, treat them as short-term and use the same tax rates as ordinary income. Reduced long-term rates apply if you held your crypto for more than a year, which are typically 0%, 15%, or 20%, depending on your total taxable income.

Apply the math to your income

Combine crypto-related taxes with taxes you owe from any other income sources to figure out your total annual tax liability.

After estimating your total taxes for the year, subtract any taxes you’ve already withheld or paid. Divide the remaining balance across the upcoming quarterly deadlines and adjust payments if your income’s changed (or you expect it to) during the year.

Let’s say you earned $20,000 in staking rewards and $10,000 in short-term trading gains in one month. If you fall into the 24% income tax bracket, you’ll owe $4,800 in tax from the staking income. Your short-term trading gains use the same tax rate, adding another $2,400. Together, your crypto activity creates an estimated $7,200 in federal tax, well over the $1,000 threshold. Your estimated quarterly payments should cover that amount across the remaining payment deadlines.

How to pay quarterly taxes

There’s no need to file a full tax return every quarter. You can submit estimated tax payments and Form 1040-ES through one of these digital platforms:

• IRS Direct Pay: You can use Direct Pay to send quarterly payments from your checking or savings accounts with no additional fees. These direct payments can be immediate or scheduled transfers, and the IRS provides instant payment confirmation through a receipt or email notification.
• Debit or credit card tax payments: The IRS accepts debit and credit card payments through authorized processors like PayPal and many large banks. These payment options let you use your phone or digital wallets to quickly transfer money, but you’ll have to pay an additional convenience fee charged by the payment provider.
• Electronic Federal Tax Payment System (EFTPS): This is a free service that businesses and some people who want to schedule payments in advance use to pay estimated taxes. This platform requires registration to use, and as of October 17, 2025, individuals can’t create new accounts on EFTPS. The IRS now points potential new users to IRS Direct Pay instead.

What happens if you don’t pay quarterly taxes?

If you don’t make the required estimated tax payments, you’ll have to pay an underpayment penalty when you file your general tax return the following year. You can calculate underpayment penalties using Form 2210, which compares what you paid during the tax year to what you should’ve paid in quarterly taxes.

The underpayment penalty works like interest. Instead of applying a flat fee to your debt, the IRS calculates exactly how much you owe based on the number of days the payment was late and the current federal interest rate. Because these penalties accrue over time, a payment you missed in April costs more than one you missed in September.

IRS safe harbor rules

The IRS provides safe harbor rules to protect taxpayers from penalties if their income changes or is difficult to predict, which is common with crypto investments. You generally won’t face an underpayment penalty if you do one of the following:

• Pay at least 90% of the current year’s total tax liability through withholding and estimated quarterly payments.
• Pay 100% of the prior year’s tax liability.
• Pay 110% of the prior year’s tax liability if your adjusted gross income (AGI) is more than $150,000 (or $75,000 if married filing separately).

Say you were a full-time employee last year and your total tax liability on Form 1040 was $10,000. This year, you quit your job and realized $60,000 in capital gains from selling Bitcoin (BTC). To avoid an underpayment penalty, you can use the prior-year safe harbor rule by paying at least $10,000 in withholding and estimated taxes throughout the year (or $11,000 if your prior-year AGI exceeded $150,000), even if your total tax this year ends up being higher.

What taxes do self-employed people pay?

Self-employed individuals – including those who make their money in crypto – are responsible for paying income tax and self-employment tax on their earnings. Here’s how to figure out how much you’ll owe.

Calculate net profit

Start with your total crypto income, then subtract your business expenses. The result is your net profit.

Estimate income tax

Add your net profit to other taxable income and apply the standard federal income tax rate based on your filing status.

Calculate self-employment tax

Self-employment tax covers Social Security and Medicare, which employers pay for W-2 employees. The IRS takes 15.3% (12.4% for Social Security + 2.9% for Medicare) from 92.35% of your net profits (100% - 7.65% to offset what employers chip in for traditional employees) once earnings reach $400. If your net self-employment income exceeds $200,000 ($250,000 if married filing jointly, or $125,000 if married filing separately), you may also owe an additional 0.9% Medicare tax.

Pay quarterly taxes

Once you estimate your income tax and self-employment tax, make your estimated tax payments during the year using the IRS Form 1040-ES.

Simplify your quarterly crypto taxes with CoinTracker

Quarterly crypto taxes come down to timing and visibility. Income often shows up before taxes do, but the IRS expects you to know how much you’re earning and file accordingly. So, staying compliant means tracking your income consistently and adjusting your tax estimates as your crypto activity changes.

CoinTracker’s Portfolio Tracker monitors your crypto wallets and activity on exchanges in real time to lower the chance of a last-minute surprise on your annual taxes.

Worried about reporting your crypto taxes? CoinTracker makes it simple. Join over three million users who trust us for hassle-free tax reporting. Start for free today!

Disclaimer: This post is informational only and is not intended as tax advice. For tax advice, please consult a tax professional.

FAQ

How do quarterly taxes differ from year-end filing?

Quarterly taxes are payments you make toward your estimated total tax liability. Year-end taxes are when you calculate your exact liability, claim all deductions, and either pay the remaining balance or request a refund for the April 15 general tax deadline.

Do I owe quarterly taxes if I only trade occasionally?

You’ll owe quarterly taxes if your occasional trades result in a tax liability of $1,000 or more. For example, if you sell 2 BTC in May at $113,000, you’ll need to make a payment by June 15 rather than wait until the following April.

Do I owe estimated taxes on staking income?

The IRS treats staking rewards as income when you gain control over the tokens. If these rewards mean you’ll owe $1,000 or more at year-end, you have to include them in your quarterly payments.

What’s the qualified business income deduction?

If you run a crypto-related business as a sole proprietor or pass-through entity, you could be eligible to deduct up to 20% of your qualified business income from your tax bill.

Can AI calculate quarterly tax obligations for me?

AI can organize data and explain some federal tax payment rules, but it struggles with the specific, real-time cost-basis tracking necessary for accurate IRS reporting. Specialized tax software (or working with a professional) is more reliable.