Estimated taxes refers to the quarterly payment for taxes by an individual who is self-employed to the IRS and other authorized tax agencies against their estimated income tax liability for the current year. These payments are used to pay self-employment taxes as well as income taxes.
The payment and calculation of estimated taxes are the initial stages leading up to the filing of annual tax return. In case of an over payment of taxes through quarterly installments, the amount is refunded after the filing of tax return.