Taxes
Quarterly Estimated Taxes: Who Pays, When, How Much
Quick answer
The US tax system is pay-as-you-go. Employees pay through withholding; everyone else — freelancers, landlords, investors, business owners — generally pays in four quarterly installments. Miss the schedule and you can owe an underpayment penalty even if you pay everything by April.
Key takeaways
- Two-part test: you generally must pay estimated tax if you expect to owe at least $1,000 after withholding and refundable credits, and withholding/credits are below 90% of this year's tax or 100% of last year's (110% if prior AGI exceeded $150,000).
- IRS “quarters” are not calendar quarters: due dates are April 15, June 15, September 15, and January 15 of the following year.
- Safe harbors avoid the underpayment penalty even if your final bill is higher: 90% of this year's tax, 100% of last year's, or 110% at higher incomes.
- The underpayment penalty is figured per quarter on Form 2210 — paying late does not retroactively fix an early quarter.
Do you have to pay? The two-part test (IRS, verified 2026-10-28)
Educational information only. This page explains federal estimated tax in general terms. It is not tax advice — consult a qualified tax professional for advice about your payments. Generally, you must make estimated payments if BOTH apply: (1) you expect to owe at least $1,000 in tax for the year after subtracting withholding and refundable credits, AND (2) you expect withholding and refundable credits to be less than the smaller of 90% of this year's tax, or 100% of last year's tax (110% if last year's AGI was over $150,000, or $75,000 if married filing separately; last year's return must cover 12 months). Special rules apply for farming and fishing income, certain household employers, short tax years, and nonresident aliens.
The four due dates (IRS, verified 2026-10-28)
Note: IRS “quarters” are not calendar quarters — the second period ends May 31, not June 30. If a due date falls on a Saturday, Sunday, or legal holiday, payment is on time if made the next business day. If you file your return and pay in full by the end of January, you generally need not make the January 15 payment separately — confirm the current rule in Publication 505.
The safe harbors, explained
Paying enough to meet a safe harbor avoids the underpayment penalty even if your final bill is higher: 90% of this year's tax — best when income fell year over year. 100% of last year's tax — best when income is stable or rising and last year's bill is known. 110% of last year's tax — required instead of 100% when last year's AGI exceeded $150,000 ($75,000 married filing separately).
Worked example: the prior-year safe harbor
Last year's total tax: $8,000. Last year's AGI: $120,000 (below the $150,000 threshold). Safe-harbor target: 100% × $8,000 = $8,000 for the year, or $2,000 per quarter. Pay $2,000 by each due date and no underpayment penalty applies on that basis, even if this year's actual tax turns out to be $11,000 — the $3,000 balance is due with the return.
High-income variant: same $8,000 prior-year tax but AGI of $180,000. Target becomes 110% × $8,000 = $8,800, or $2,200 per quarter.
How to figure and pay
Use Form 1040-ES and its worksheet: project income, subtract deductions and credits, apply rates, divide by four (adjusting for withholding already expected). Uneven income? The annualized-income method (Form 2210, Schedule AI) lets payments track actual income per period — valuable for seasonal businesses. Pay via IRS online account, Direct Pay, EFTPS, or the IRS app; report all estimated payments on Form 1040, line 26 (IRS FAQ, verified 2026-10-28). Alternative: if you also have W-2 wages, increasing withholding can cover the requirement and may avoid Form 2210 altogether.
What happens if you underpay
The underpayment penalty is figured per quarter on Form 2210 — paying late in the year does not retroactively fix an early quarter. Voluntary extra payments can still reduce the remaining balance, but they do not erase the penalty for the period already missed.
At a glance
| Payment period | Due date |
|---|---|
| January 1 – March 31 | April 15 |
| April 1 – May 31 | June 15 |
| June 1 – August 31 | September 15 |
| September 1 – December 31 | January 15 of the following year |
Quarterly estimated tax due dates (IRS estimated-tax FAQ, verified 2026-10-28)
What this means for you
Pay-as-you-go means pay on schedule, not just by April: meet a safe harbor each quarter and the penalty question goes away, even if the final balance is higher than expected. Unpack Money currently earns $0 affiliate revenue and has no approved affiliate programs, and this page contains no affiliate links.
FAQ
Can I pay the whole year at once?
Yes — you may pay the full estimated amount with the first installment. Most people spread it for cash-flow reasons.
I have a W-2 job and a side business. Do I owe quarterly payments?
Only if the two-part test is met — often, increased W-4 withholding covers the side income and no quarterly payments are needed.
Do estimated payments cover self-employment tax too?
Yes — estimated payments can cover both income tax and self-employment tax (IRS SE-tax page).
Sources
- IRS, estimated tax FAQ — https://www.irs.gov/faqs/estimated-tax — verified 2026-10-28
- IRS, self-employment tax — https://www.irs.gov/businesses/small-businesses-self-employed/self-employment-tax-social-security-and-medicare-taxes — verified 2026-10-28
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