The IRS requires you to pay federal income tax as it accrues, not as a lump sum at the end of the year. If you’re an employee, your employer meets the requirement for you by withholding income tax on your check.

You might have to make estimated tax payments on your own if you aren’t an employee, however, to avoid interest and penalties. Consult the chart for important tax filing deadlines for tax year 2019. Keep reading to find out if you should be paying estimated taxes and how doing so can minimize your tax debt at the end of the year.

What Are Estimated Tax Payments and Who Pays Estimated Taxes?

Generally, you must make estimated tax payments if you expect to owe more than $1,000 when you file your income tax return and you are self-employed, an independent contractor or you receive dividend income, work as a freelancer or even have gambling winnings. You are exempt from paying estimated taxes, however, if you meet the following three conditions:

• You did not have any tax liability for the previous year

• For the entire year, you were a U.S. citizen or resident

• Your prior tax year covered a 12-month period

Related: This Is Which 1099 Form You Should File

How Can You Calculate Estimated Quarterly Taxes?

You might be wondering, “How much tax will I pay?” There are two methods to calculate estimated taxes:

1. Safe Harbor

If you expect to owe estimated taxes, the easiest way to calculate the amount is to rely on the safe harbor. Under the safe harbor, you won’t face any interest or penalties if your equal, quarterly tax payments — plus any other withholding — constitute at least the amount of your taxes for tax year 2018.

You might need to pay more if your adjusted gross annual income is higher, however: Your estimated tax payments must be at least 110 percent of the tax from your prior year’s return if your adjusted gross income from that year exceeded $150,000 — or $75,000 if your tax filing status was married and filing separately last year.

For example, if your AGI from the previous year is $100,000 and you owed $16,000 in taxes, you must pay at least $4,000 each quarter to avoid interest and penalties under the safe harbor method of calculating estimated taxes.

2. 90 Percent of Taxes Due

You can also make sure your estimated tax payments equal 90 percent of your taxes due. You can calculate this number with your estimate of how much you’ll earn for the year plus how many deductions you’ll qualify for — including itemized deductions — and tax credits you can take. Use Form 1040-ES as a tax estimator to assist with your calculations.

Working as a freelancer can be unpredictable, so it can be hard to know exactly how much you’ll earn. You can do your best with estimates, but if your estimate for how much you’ll owe is too low, you could find yourself on the hook for interest and penalties for underpaying your estimated taxes. For these reasons, it’s safer to use the safe harbor method.

How Does Withholding Affect Estimated Quarterly Tax Payments?

If you have a job that withholds money from your paychecks for taxes, that money counts toward the amount you have to pay in estimated taxes. For example, if each quarter you need to pay $4,000 but your employer withholds only $2,500, you will need to pay $1,500 in estimated taxes each quarter.

You can ask your employer to withhold an additional amount on top of your normal withholding so you don’t have to make estimated tax payments. You can update your Form W-4 to change your withholding with your employer at any time. It’s important to rethink your withholding when you have any major life event, such as getting married or having a child.

How Do You Make Make Estimated Quarterly Tax Payments?

You can make estimated tax payments quarterly throughout the year by mail, by phone or electronically. Choosing to mail in your payments means you have to submit estimated tax payment vouchers — which can be found on Form 1040-ES — to identify your payments. You should also make your check payable to “United States Treasury.” Where you must mail your vouchers and checks depends on where you live — check Form 1040-ES to find the mailing address you should use.

Once you calculate the answer to the question, “How much do I owe the IRS?,” pay your estimated taxes by the due date for each quarterly payment. The first quarterly payment is typically due April 15, the second on June 15, the third on Sept. 15 and the fourth by Jan. 15 of the following year. The deadline is pushed to the next business day if it falls on a weekend or holiday. You don’t have to make the fourth quarter payment by that date, however, if you file your tax return early — by Jan. 31, at which point you can pay taxes owed then.

How Should You Report Payments on Your Income Taxes?

If you’ve made estimated tax payments throughout the year, you must report them on your regular income tax return to get credit. You report them on line 66 of Schedule 5 for Form 1040 when you file a tax return. If you overpaid in 2018, you’ll receive an income tax refund in 2019.

Related: Here’s the No. 1 Thing Americans Do With Their Tax Refund

What Are the Penalties for Underpayment of Estimated Taxes?

If you underpay your taxes, you could owe interest and penalties. If you think you owe a penalty, check Form 2210 to determine whether the IRS will figure it for you.

You might qualify for an exception if you missed a payment, however. The IRS says the penalty for underpayment might be waived if it was caused by a disaster or other extreme circumstance, or if you retired — and you were at least 62 — or became disabled, and you had reasonable cause for the underpayment.

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• Trump’s Tax Reform: How All the New Laws Affect Your Taxes

• The 29 Best Banks of 2019

• Watch: How to Legally Cheat Your Tax Bracket

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Gabrielle Olya contributed to the reporting for this article.

This article originally appeared on GOBankingRates.com: Got a Side Hustle? Here’s How to Calculate Estimated Taxes