Estimated amount in taxes due to be paid in the coming year, short any tax credits.

Corporations, estates and trusts, self-employed persons, and persons who do not have employers withhold taxes are typically required to estimate taxes, and make quarterly tax payments to the IRS and their state.

Throughout the year, tax payers much pay the vast majority of their tax liability through employer withholding and/or in quarterly estimated tax payments. Those who do not withhold taxes but still accumulated tax liability may base their estimated tax on the previous year's taxes. The specific way one's estimated tax is calculated will vary upon current law. But the IRS and local authorities have severe penalties for underpayment of estimated taxes.