Do you receive income without enough federal tax withholding? Are you self-employed, a business owner, receiving 1099 income, or earning investment income?

In these situations, you may need to make estimated tax payments during the year.

The U.S. federal tax system generally operates on a “pay-as-you-go” basis. Taxes are expected to be paid as you receive or earn income throughout the year, either through withholding or estimated tax payments.

Reviewing your tax situation during the year can help you plan your payments, reduce surprises when you file your tax return, and avoid or reduce a potential underpayment penalty.

However, making estimated tax payments does not guarantee that you will not have a balance due or automatically avoid a penalty. Each situation should be reviewed individually.

Estimated taxes are payments made during the year to cover federal taxes that are not being sufficiently paid through withholding.

These payments may cover:

• Federal income tax.
• Self-employment tax, which includes Social Security and Medicare taxes for self-employed individuals.
• Other federal taxes that may apply to your tax return.

Estimated tax payments are different from your annual income tax return.

During the year, you make payments. When you file your annual tax return, you report your income, deductions, credits, withholding, and estimated tax payments.

The IRS then compares your total tax liability with the amounts already paid.

The result may be a refund, a balance due, or, depending on the circumstances, an estimated tax underpayment penalty.

Who May Need to Pay Estimated Taxes?

You should pay particular attention to estimated taxes if you receive income that does not have enough federal tax withheld.

This may include:

• Self-employed individuals.
• Independent contractors who receive Forms 1099.
• Freelancers.
• Sole proprietors.
• Partners in partnerships who receive pass-through income reported on Schedule K-1.
• S corporation shareholders who receive pass-through income reported on Schedule K-1.
• LLC owners whose business income is reported on their individual tax returns.
• Individuals receiving interest or dividends.
• Rental property owners.
• Individuals with capital gains.
• Individuals receiving unemployment compensation.
• Individuals with other income that does not have sufficient federal withholding.

Partnerships and S corporations generally pass certain income, deductions, credits, and other tax items through to their owners. As a result, partners and shareholders may need to make estimated tax payments at the individual level.

The General $1,000 Rule

For individuals, including sole proprietors, partners, and S corporation shareholders, the IRS generally requires estimated tax payments when both of the following conditions apply:

1. You expect to owe at least $1,000 in tax for 2026 after subtracting your withholding and refundable credits; and

2. You expect your withholding and refundable credits to be less than the smaller of:

• 90% of the tax shown on your 2026 tax return, or
• 100% of the tax shown on your 2025 tax return.

Exceptions and special rules may apply. Review the current instructions for Form 1040-ES.

The 110% Rule for Certain Higher-Income Taxpayers

For certain higher-income taxpayers, the percentage based on the prior year's tax increases from 100% to 110%.

Generally, for 2026 estimated taxes, this rule applies if your 2025 Adjusted Gross Income (AGI) exceeded $150,000, or $75,000 if your filing status is Married Filing Separately.

This rule is part of what is commonly referred to as the safe harbor rules.

Meeting a safe harbor requirement can help you avoid the federal estimated tax underpayment penalty, although you may still have a balance due when you file your tax return.

Who May Not Need to Make Estimated Tax Payments?

There is an important exception.

Generally, you do not need to make estimated tax payments for 2026 if:

• You had no federal tax liability for 2025;
• You were a U.S. citizen or resident for all of 2025; and
• Your 2025 tax year covered a full 12-month period.

You may also not need estimated tax payments if your withholding and credits are sufficient to satisfy the applicable requirements.

Therefore, receiving 1099 income or being self-employed does not automatically mean that you must send four estimated tax payments.

Your overall tax situation should be considered.

How Are Estimated Taxes Calculated?

The IRS provides Form 1040-ES and its worksheet to help calculate estimated tax payments.

To prepare an appropriate estimate, review information such as:

• Expected adjusted gross income.

• Expected taxable income.

• Self-employment income.

• Expected deductions.

• Tax credits.

• Federal income tax withholding.

• Self-employment tax.

• Other taxes that may apply.

• Changes in your household or tax situation.

• Changes in applicable tax laws.

Your 2025 federal tax return can be a useful starting point for calculating your 2026 estimated taxes, but you should not use the prior year's figures without considering changes expected for the new year.

If your income increases or decreases, or your deductions, credits, or withholding change, recalculate your estimated tax payments.

How Much Should You Pay?

There is no single amount or percentage that works for every taxpayer.

Two people with the same gross income may have very different tax liabilities because of factors such as:

• Business expenses.

• Filing status.

• Dependents.

• Deductions.

• Tax credits.

• Additional W-2 income.

• Federal withholding.

• Investment income.

• Partnership or S corporation income.

• Self-employment tax.

• Other taxes.

For that reason, statements such as “save 20%” or “pay 25% of your income” may sometimes be useful as general planning references, but they are not substitutes for an actual tax calculation.

The appropriate amount should be estimated based on your complete tax situation.

2026 Estimated Tax Payment Deadlines

Estimated tax payments are not necessarily due every three calendar months.

For calendar-year taxpayers, the IRS establishes the following general payment periods and deadlines for 2026:

Income Earned During	Payment Due Date
January 1 – March 31, 2026	April 15, 2026
April 1 – May 31, 2026	June 15, 2026
June 1 – August 31, 2026	September 15, 2026
September 1 – December 31, 2026	January 15, 2027

Income Earned During Payment Due Date

January 1 – March 31, 2026 April 15, 2026

April 1 – May 31, 2026 June 15, 2026

June 1 – August 31, 2026 September 15, 2026

September 1 – December 31, 2026 January 15, 2027

If a due date falls on a Saturday, Sunday, or legal holiday, the deadline generally moves to the next business day.

Farmers, fishermen, and fiscal-year taxpayers may be subject to different rules and deadlines.

Can You Avoid the January 15 Payment?

In certain circumstances, yes.

If you file your 2026 federal income tax return and pay all tax due by the special deadline established by the IRS, you may not need to make the estimated tax payment that would normally be due January 15.

For 2026, because of the calendar, that date is February 1, 2027.

Review the applicable Form 1040-ES instructions before relying on this alternative.

What If Your Income Is Not Equal Throughout the Year?

Not every taxpayer earns income evenly throughout the year.

For example, a business may generate most of its profits during the final months of the year. An individual may also sell an investment or property and generate a significant gain during a particular period.

In these circumstances, simply dividing the annual estimated tax into four equal payments may not accurately reflect when the income was earned.

The Annualized Income Installment Method may allow required payments to be calculated based on when the income was actually received.

This method may be particularly relevant for:

• Seasonal businesses.

• Individuals with fluctuating income.

• Individuals receiving significant bonuses.

• Individuals realizing capital gains during a particular period.

• Taxpayers whose income increases substantially during the year.

Review Publication 505 and Form 2210 for the applicable rules.

How Can You Pay Estimated Taxes?

Use an official IRS payment method.

Available options include:

• IRS Online Account

• IRS Direct Pay

• EFTPS

• Debit card, credit card, or digital wallet through an authorized payment provider.

• Check or money order using the appropriate Form 1040-ES payment voucher.

• Other options available through IRS Payments.

When making a payment, make sure you select the correct payment type and tax year.

Keep confirmation of each payment and record:

• Date.

• Amount.

• Tax year.

• Payment method.

• Confirmation number, when applicable.

If you mail a payment, use the appropriate address listed in the current Form 1040-ES instructions. Do not assume it is the same address used to mail your annual income tax return.

What Happens If You Do Not Pay Enough or Pay Late?

The IRS may assess an underpayment of estimated tax penalty when you do not pay enough tax during the year or when required payments are made late.

The penalty depends on factors such as:

• How much you were required to pay.

• How much you actually paid.

• The date of each payment.

• The amount required for each payment period.

• Available withholding.

• When the income was received.

• Whether an exception or special rule applies.

The penalty is also considered by payment period.

This means that making a large payment later in the year does not necessarily correct an underpayment from an earlier period.

An underpayment penalty related to an earlier period may even exist if you later pay enough tax and ultimately receive a refund when you file your tax return.

Review Form 2210 and IRS Topic No. 306.

Can the IRS Waive an Estimated Tax Penalty?

Certain exceptions and circumstances may result in the penalty not applying or may allow a taxpayer to request a waiver.

Situations that may require special consideration include certain disasters, unusual circumstances, retirement after a certain age, or disability.

However, these exceptions have specific requirements.

Do not assume that an exception automatically applies.

Review the applicable requirements and retain documentation supporting your circumstances.

Additional Withholding vs. Estimated Tax Payments

If you also receive W-2 wages, making estimated tax payments is not necessarily your only option.

You may review your federal income tax withholding and, when appropriate, request additional withholding from your paycheck by submitting a new Form W-4.

You may also use the IRS Tax Withholding Estimator.

This strategy can be useful for someone who has a combination of:

• W-2 employment.

• A business or self-employment activity.

• 1099 income.

• Investment income.

• Partnership or S corporation income.

The appropriate combination depends on your individual situation.

How to Reduce Surprises When You File Your Tax Return

Tax planning should not begin in December.

Throughout the year:

• Review your income periodically.

• Keep your bookkeeping up to date.

• Properly record business expenses.

• Set aside money for taxes.

• Review your withholding.

• Update your estimates when your income changes.

• Record all estimated tax payments.

• Keep payment confirmations.

• Review your Schedules K-1 when available.

• Retain the worksheets used for your calculations.

A quarterly review can be particularly helpful for small-business owners and self-employed individuals.

Situations That May Require a New Tax Estimate

Consider recalculating your estimated taxes if:

• Your income increases or decreases significantly.

• You start a business.

• You become self-employed during the year.

• You receive a significant distribution or Schedule K-1.

• You sell stocks or other investments.

• You sell property.

• You purchase significant assets for your business.

• You get married or divorced.

• You have a new dependent.

• You change jobs.

• Your federal withholding changes significantly.

• You receive foreign income.

• You have an account, property, or business outside the United States.

Some of these situations may also create additional tax reporting requirements beyond estimated tax payments.

How 1 Key Financial Can Help

If you are self-employed, own a business, or receive income without sufficient federal withholding, 1 Key Financial can help you review your tax situation throughout the year.

We can help you:

• Estimate your income and potential tax liability.
• Review estimated tax payments you have already made.
• Determine whether your upcoming payments should be adjusted.
• Review Schedule C, partnership, and S corporation income.
• Coordinate your bookkeeping so your financial information stays current.
• Review your withholding when you also receive W-2 wages.
• Prepare your individual and business tax returns.
• Maintain organized records of your tax payments and documentation.

Do not wait until you file your tax return to find out how much you may owe.

A review during the year can help you plan your payments and reduce surprises during tax season.

Learn more about our Tax Preparation Services and Business Services.

1 Key Financial — Service in English and Spanish.

Frequently Asked Questions About Estimated Taxes

Do All Self-Employed Individuals Have to Pay Estimated Taxes?

Not necessarily.

Having self-employment income does not automatically mean you must make estimated tax payments.

You should consider your expected tax, withholding, credits, and other available payments. In general, the $1,000 rule and the 90%/100% requirements—or 110% when applicable—help determine whether estimated payments are required.

Do I Need an LLC to Pay Estimated Taxes?

No.

Estimated taxes are based on your tax liability, not on whether you have formed an LLC.

A sole proprietor, freelancer, or independent contractor may need to make estimated payments even if they have never formed a separate legal entity.

Are Estimated Taxes the Same as My LLC's Taxes?

Not necessarily.

An LLC is a legal structure and may receive different classifications for federal tax purposes.

Depending on its tax classification, the income may be reported directly on the owner's individual return or through a separate partnership, S corporation, or corporation tax return.

You should understand the entity's tax classification before determining who makes the payments and how they are calculated.

Do Partners in a Partnership Make Estimated Tax Payments?

They may need to.

A partnership generally does not pay federal income tax on each partner's distributive share of income. Partners receive tax information through Schedule K-1 and may need to make estimated payments individually.

Can S Corporation Shareholders Need Estimated Tax Payments?

Yes.

In addition to any W-2 wages and withholding, a shareholder may receive pass-through income from the S corporation reported on Schedule K-1.

Depending on the shareholder's total tax situation and available withholding, additional estimated tax payments may be necessary.

Can I Just Pay Everything When I File My Tax Return?

You can pay a balance when you file, but that does not mean you will avoid an underpayment penalty for amounts that should have been paid during the year.

The federal tax system generally requires taxes to be paid as income is earned or received.

Can I Change My Estimated Tax Payments During the Year?

Yes.

Estimated tax payments should be reviewed when your income, deductions, credits, or withholding change.

You do not necessarily have to make the exact same payment each period if your circumstances have changed.

What Form Is Used for Estimated Taxes?

Individuals generally use Form 1040-ES to calculate estimated taxes.

Nonresident alien taxpayers may be subject to different rules and forms.

What Happens If I Miss an Estimated Tax Payment?

Review the situation as soon as possible.

Making a later payment may reduce the amount that continues to accrue, but it does not necessarily eliminate a penalty associated with the period during which the payment was late.

Review Form 2210 and Topic No. 306 or discuss your situation with a tax professional.

Can I Make Estimated Tax Payments If I Also Have a W-2 Job?

Yes.

You can make estimated tax payments or consider increasing the federal income tax withholding from your paycheck using Form W-4.

The appropriate strategy depends on your additional income and overall tax situation.

Does Meeting a Safe Harbor Mean I Will Not Owe Taxes When I File?

No.

This is an important distinction.

Meeting a safe harbor requirement can help you avoid an estimated tax underpayment penalty, but it does not necessarily mean you have paid your entire tax liability for the year.

You may still have a balance due when you file your tax return.

Official IRS Resources

For current information, visit:

• IRS — Estimated Taxes
• Form 1040-ES — Estimated Tax for Individuals
• Publication 505 — Tax Withholding and Estimated Tax
• Form 2210 — Underpayment of Estimated Tax
• IRS Topic No. 306
• IRS Tax Withholding Estimator
• IRS Payments

Start Planning Before You File Your Tax Return

If you receive 1099 income, are self-employed, receive partnership or S corporation income, have investment income, or simply do not have enough federal tax withheld, reviewing your taxes during the year can help you make better-informed decisions.

Learn about our Tax Preparation Services

Learn about our Business Services

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Important Notice

This content provides general educational information based on IRS rules and information available for the 2026 tax year. It does not constitute individualized tax advice or a personalized tax calculation.

Each taxpayer's circumstances are different. Tax laws, thresholds, rates, procedures, and forms may change. Before making or modifying estimated tax payments, review current IRS instructions and consider your complete tax situation.

1 Key Financial does not guarantee that making specific payments will eliminate a balance due, interest, or penalties.