How to Pay Quarterly Estimated Taxes

Fact-checked by the LegalGlass editorial team against primary sources · Published Aug 6, 2026 · Last updated Aug 6, 2026

Pay quarterly estimated taxes with Form 1040-ES if you expect to owe $1,000 or more after withholding when your return is filed. For a calendar-year taxpayer, the four payments are due April 15, June 15, September 15, and January 15. Pay online through IRS Direct Pay or EFTPS. Meet a safe harbor to avoid the underpayment penalty.

Who Must Pay Quarterly Estimated Taxes

Estimated taxes are how you pay tax on income that is not subject to withholding - self-employment income, business profit, interest, dividends, rent, and gains. Per the IRS, "individuals, including sole proprietors, partners, and S corporation shareholders, generally have to make estimated tax payments if they expect to owe tax of $1,000 or more when their return is filed." Corporations must pay if they expect to owe $500 or more.

Business owners are the classic case: no employer withholds their income or self-employment tax, so they prepay it in quarters. A Schedule C sole proprietor, a partner receiving a Form 1065 K-1, and an S corporation shareholder all typically owe estimated tax on their pass-through income. If your only income is W-2 wages with adequate withholding, you usually do not need to pay estimates.

There is one narrow exception to the $1,000 test. You do not have to pay estimated tax if you had no tax liability for the prior year, you were a U.S. citizen or resident for the whole year, and your prior tax year covered 12 months, per the IRS. A brand-new business that owed nothing the year before can therefore skip the first year's estimates, though doing so leaves the full bill due at filing. Most established owners do not qualify for this exception and must pay each quarter.

The Safe-Harbor Rules

You avoid the underpayment penalty by paying enough during the year to meet a safe harbor, even if you still owe a balance at filing. Per the IRS, you generally satisfy the requirement by paying either 90% of the current year's tax or 100% of the tax shown on the prior year's return. The prior-year figure rises to 110% if the adjusted gross income on that return was more than $150,000.

The prior-year safe harbor is popular because it is a known, fixed number - pay 100% (or 110%) of last year's tax in four equal parts and you are protected from penalty no matter how much this year's income grows. You still settle the actual balance when you file.

What You'll Need

Before you compute a payment, gather a few items so the Form 1040-ES worksheet is accurate:

• Your prior-year return - for the 100%/110% safe-harbor figure and AGI.
• A current-year income estimate - projected business profit and other untaxed income.
• Expected deductions and credits - the standard deduction, the half-of-SE-tax deduction, and any credits.
• Withholding already in place - from a W-2 job or a spouse's job, which counts toward the total.

Step-by-Step: How to Pay

Paying estimated tax is a four-step routine you repeat each quarter.

1. Confirm you must pay. Check the $1,000 expected-balance test above.
2. Estimate your tax with Form 1040-ES. The Form 1040-ES worksheet projects income tax plus self-employment tax for the year.
3. Choose a safe harbor and divide by four. Take 90% of the current year, or 100% or 110% of the prior year, and split it into four equal payments.
4. Pay by each due date. Use IRS Direct Pay, EFTPS, a card, or a mailed voucher, then keep the confirmation.

Recompute mid-year if your income changes materially; you can raise or lower the remaining payments so you still land on a safe harbor by year-end.

The Four Quarterly Due Dates

Estimated tax is paid in four installments across the year, per the IRS. For a calendar-year taxpayer the dates are:

If a due date falls on a weekend or legal holiday, the payment is due the next business day. The periods are uneven - the second covers two months and the third covers three - so equal quarterly amounts are still on time. These dates line up with the annual filing calendar in when business taxes are due.

How to Pay: IRS Direct Pay and EFTPS

The IRS offers several payment channels, and electronic methods are fastest. IRS Direct Pay lets individuals pay directly from a checking or savings account at no charge and schedule payments in advance. The Electronic Federal Tax Payment System (EFTPS) is a free enrollment-based system used by many businesses, including for corporate estimated payments and payroll deposits.

You can also pay by debit or credit card (processor fees apply), through your IRS Online Account, or by mailing a check with a Form 1040-ES voucher. Whichever channel you use, keep proof of each payment; you will credit these amounts on your annual return. Corporations must generally deposit estimated tax electronically through EFTPS.

The Underpayment Penalty

If you pay too little or too late, the IRS charges an underpayment penalty under 26 U.S. Code § 6654 for individuals (§ 6655 for corporations). The penalty is effectively interest on each period's shortfall for the time it went unpaid, computed on Form 2210. It can apply even if you get a refund at filing, because it is charged per period, not on the year-end balance.

The IRS may waive the penalty in limited situations - for example, a casualty or disaster, or if you retired after age 62 or became disabled during the year. Meeting a safe harbor is the reliable way to avoid it. Because withholding is treated as paid evenly across the year, some owners with a side W-2 job increase Form W-4 withholding instead of making quarterly payments.

One point owners often miss: the penalty is charged per period, so paying a large fourth-quarter amount does not cure an earlier shortfall. If you skip the April payment and catch up in January, the penalty still runs on the first quarter's underpayment for the whole intervening period. That is why the annualized income installment method matters for a lumpy year, and why the fixed prior-year safe harbor is the simplest protection. Keep in mind that most states with an income tax run their own estimated-payment system on a parallel schedule, so check your state's rules alongside the federal ones.

A Worked Example

A simple example shows how the pieces fit. Suppose a sole proprietor expects $60,000 of net profit this year, no other income, and no withholding. Their tax has two parts: self-employment tax and income tax.

1. Self-employment tax. $60,000 × 92.35% = $55,410 of net earnings; × 15.3% = about $8,478, per Schedule SE.
2. Deduct half of SE tax. Roughly $4,239 comes off income before income tax is figured.
3. Income tax. Apply the standard deduction and the brackets to the remaining income to estimate income tax for the year.
4. Total and divide. Add the two taxes, subtract any withholding, and divide the result into four equal payments.

The Form 1040-ES worksheet and Publication 505, Tax Withholding and Estimated Tax, walk this computation in full. Our self-employment tax calculator handles the SE-tax half automatically so you can size each quarterly payment.

Special Situations: Uneven Income and Farmers

If your income arrives unevenly across the year, equal quarterly payments can overpay early or underpay late. The IRS allows an "annualized income installment method," computed on Form 2210, Schedule AI, that lets you pay more in quarters when you actually earn more and less when income is low, reducing the penalty on a lumpy year.

Farmers and fishers have their own rule: if at least two-thirds of gross income comes from farming or fishing, they can make a single estimated payment by January 15 and still avoid penalty, or file and pay in full by March 1, per the IRS. Because withholding is treated as paid evenly across the year regardless of when it occurred, an owner with a side W-2 job can also raise Form W-4 withholding late in the year to cover a shortfall in place of a quarterly payment.

Related Guides

• Self-employment tax - the biggest piece of most owners' estimates.
• Self-employment tax calculator - size your quarterly SE-tax payment.
• Schedule C - the return your estimates reconcile against.
• When are business taxes due? - annual and estimated dates together.
• How to file business taxes - where estimates are credited.
• Form 1120 vs. 1120-S vs. 1065 - who receives pass-through income.
• Single-member LLC - a common estimated-tax payer.
• S-corp vs. LLC - how structure affects what you prepay.
• Form 2553 explained - the S election and owner estimates.
• Business tax hub - all returns, schedules, and deadlines.

Frequently Asked Questions

Who has to pay quarterly estimated taxes?

Individuals - including sole proprietors, partners, and S corporation shareholders - generally must pay if they expect to owe $1,000 or more when the return is filed, per the IRS. Corporations must pay if they expect to owe $500 or more.

What is the safe harbor for estimated taxes?

You generally avoid a penalty by paying at least 90% of the current year's tax or 100% of the prior year's tax. The prior-year figure rises to 110% if your adjusted gross income on the prior return exceeded $150,000.

When are quarterly estimated taxes due?

For a calendar-year taxpayer, the four payments are due April 15, June 15, September 15, and January 15 of the following year. If a due date falls on a weekend or legal holiday, the payment is due the next business day.

How do I pay estimated taxes?

Pay electronically with IRS Direct Pay from a bank account at no charge, enroll in EFTPS, pay by card, or mail a check with a Form 1040-ES voucher. Electronic payment is fastest and gives immediate confirmation.

What is the penalty for not paying estimated taxes?

If you underpay, the IRS charges an underpayment penalty under 26 U.S. Code § 6654, computed as interest on the shortfall for each period it was unpaid. The penalty is figured on Form 2210 and can apply even if you get a refund at filing.

Do I still pay estimated taxes if I have a W-2 job?

Maybe not. If your paycheck withholding covers a safe-harbor amount, you can skip estimated payments. Otherwise you can increase withholding on Form W-4 instead, since withholding is treated as paid evenly across the year.

Sources

1. IRS - Estimated Taxes ($1,000 / $500 thresholds; 90% / 100% / 110% safe harbors; due dates; payment methods).
2. IRS - About Form 1040-ES, Estimated Tax for Individuals.
3. IRS - About Form 2210, Underpayment of Estimated Tax by Individuals.
4. IRS - IRS Direct Pay (free payment from a bank account).
5. IRS - EFTPS: The Electronic Federal Tax Payment System.
6. IRS - Your Online Account.
7. IRS - Estimated Tax FAQs (weekend/holiday due-date rule).
8. IRS - Publication 505, Tax Withholding and Estimated Tax (annualized income installment method; farmers and fishers).
9. IRS - About Schedule SE (Form 1040), Self-Employment Tax.
10. IRS - About Form W-4, Employee's Withholding Certificate.
11. Cornell LII - 26 U.S. Code § 6654, Failure by individual to pay estimated income tax.
12. Cornell LII - 26 U.S. Code § 6655, Failure by corporation to pay estimated income tax.

LegalGlass provides general information for educational purposes and is not a law firm or a substitute for advice from a licensed attorney or tax professional. This page is information, not advice. Tax thresholds, due dates, and rules change; verify current requirements with the IRS before acting.