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On April 15, most freelance writers filed their 1040 forms for 2004, and many made their first estimated tax payment for 2005.  And before they know it, another deadline is just around the corner.

Wednesday, June 15, is the due date for the second quarterly installment of your estimated income tax (including any self-employment tax) for 2005, if you are obligated to make payments because your estimated tax exceeds $1,000.

Who needs to make estimated payments? Individuals with income from sources not subject to withholding. This category includes freelance writers and other self-employed individuals who operate businesses or professions as sole proprietorships, in partnerships with others, or as independent contractors.

But even when withholding is subtracted, it might prove insufficient, as can happen with salaries and bonuses received by you or your spouse. The IRS can assess penalties for insufficient quarterly payments or for failure to pay the installments on time as they become due. It matters not that your final estimates are enough to erase any balance due when you submit 2005's 1040 form in 2006.

There are "safe harbors" or exceptions that relieve you of any penalties for above $1,000 underpayments. For relief from penalties, you must satisfy two requirements.

First, make payments (remember to take account of withholding subtracted from paychecks during 2005 or an overpayment of 2004's taxes that you elect to apply to 2005's bill) by the due dates—for 2005, by April 15, June 15, Sept. 15, and Jan. 16 (the 15^th falls on a Sunday).

Second, those payments must exceed the least of the following three amounts:

1. 90 percent of the actual taxes you owe for 2005.
 

2. 100 percent of the taxes you paid for 2004 (the figure on line 62 of 2004's 1040 form). This is so even if the amount due was zero, provided the return covered 12 months, as it ordinarily would.

The exception based on the prior year's tax makes use of a fixed number. Consequently, it's usually the easiest way for most freelancers to calculate their payments and avoid penalties.

An example: Your tax payments total $12,000 for 2004 and $13,000 through estimates or withholding in 2005. With those kinds of numbers, you are home free, no matter how much 2005's liability turns out to be.

3. 90 percent of the actual taxes you owe for 2005, determined by "annualizing" income actually received by the end of the quarter in question.

The third escape clause is most helpful to persons who receive the bulk of their incomes late in 2005—for instance, writers who receive book royalties in Dec.

Stricter rules apply when 2004's adjusted gross income (the amount on the last line of page one of Form 1040) surpasses $150,000 ($75,000 for marrieds filing separately). The 100-percent escape hatch is available only when estimated payments are at least equal to:

1. 90 percent of the actual taxes you owe for 2005 or
2. 110 percent of your tax liability for 2004, whichever is the lesser figure.