How to Work Out Your Quarterly Estimated Tax Payments
Shankar Subramanian, CPAIf you work for yourself, do gig work, or own an S-Corp, no one takes tax out of your pay. Here is how to figure out what to send the IRS each quarter and avoid the penalty.
When you have a W-2 job, your employer takes tax out of every paycheck. When you work for yourself, nobody does that for you. The IRS still wants the money during the year, so you send it in four payments called estimated taxes.
Who needs to pay
You generally need to make estimated payments if you expect to owe $1,000 or more when you file, after your withholding and credits. That usually includes:
- Freelancers, consultants, and gig workers
- Sole owners who file a Schedule C
- S-Corp owners who take distributions on top of a small salary
- People with large investment gains, rental income, or side income
The four due dates for the 2026 tax year
- April 15, 2026 for income earned January through March
- June 15, 2026 for April and May
- September 15, 2026 for June through August
- January 15, 2027 for September through December
If a date falls on a weekend or holiday, it moves to the next business day.
The simple way to avoid the penalty
You will not owe an underpayment penalty if your payments during the year add up to the smaller of:
- 90% of your total tax for 2026, or
- 100% of your total tax for 2025
If your adjusted gross income for 2025 was more than $150,000 ($75,000 if married filing separately), use 110% of your 2025 tax instead of 100%.
The prior-year rule is the easy one. Take last year's total tax, divide it by four, and pay that amount on each date. Even if you earn much more this year, you are safe from the penalty. You just pay the rest when you file.
How to estimate this year's tax
If this year looks very different from last year, build a quick estimate:
- Estimate your profit. Expected income minus business costs.
- Add self-employment tax. This is Social Security and Medicare for people who work for themselves. It is about 15.3% of 92.35% of your profit (the Social Security part stops at a yearly earnings cap). On $80,000 of profit, that is about $11,300.
- Add income tax. Your profit flows onto your personal return, where it is taxed at your normal rates after your deductions. You can deduct half of your self-employment tax.
- Subtract withholding from any W-2 job or from your spouse's job.
- Divide what is left by the number of payments remaining.
Texas has no state income tax, so most Houston clients only make federal payments.
How to pay
Use IRS Direct Pay, your IRS Online Account, or EFTPS. Each one gives you a confirmation number. Save it with your tax records.
A tip from our clients' files
Set aside a fixed share of every payment you receive, often 25% to 30%, in a separate savings account. When a due date comes, the money is already there.
Not sure what your number should be? We can work it out with you on a free call.
Sources: IRS Form 1040-ES (2026) and IRS guidance on the underpayment of estimated tax penalty.
Want help with this?
Book a free 30 minute call with Shankar. We will look at your numbers and make a plan that fits you.
