Quarterly Estimated Taxes: Who Must Pay and When?

The US tax system operates on a “Pay-As-You-Go” basis. If you are a freelancer or business owner and you wait until April 15th to pay your taxes, the IRS will hit you with a painful Underpayment Penalty. Generally, if you expect to owe more than $1,000 at year-end, you must pay in four installments. Here are the 2026 due dates and the “Safe Harbor” formula to avoid penalties without doing complex math.

BMT Tax Team BMT Tax Team · 📅 Feb 2026 · ⏱️ 6 min read · TAX TIPS › SELF EMPLOYED
Threshold
$1,000
Owed at Year EndRule
Dates
4x
Apr, Jun, Sep, JanTime
Target
100%
Of Last Year’s TaxSafe

1. The Rule: The $1,000 Threshold

The IRS wants their cut immediately, not next year.

Form 1040-ES
The General Rule: If (Total Tax – Withholding) is greater than $1,000, you must make estimated payments.
The Exception: If you had zero tax liability last year (e.g., you didn’t work or had a loss), you generally don’t have to pay estimated taxes this year.

2. 2026 Due Dates (Checklist)

Warning: The quarters are NOT equal in length. Q2 is only 2 months long.

Payment Period Income Earned Due Date
Q1 (Quarter 1) Jan 1 – Mar 31 Apr 15, 2026
Q2 (Quarter 2) Apr 1 – May 31 (Short!) Jun 15, 2026
Q3 (Quarter 3) Jun 1 – Aug 31 Sep 15, 2026
Q4 (Quarter 4) Sep 1 – Dec 31 Jan 15, 2027

3. Timeline: How the Penalty Accumulates

You cannot skip Q1 and pay double in Q4. The IRS charges interest daily on the missing money.

Scenario IRS Action Result (Penalty)
Miss Apr 15 Payment Clock Starts
Interest accrues (~8% APY)
Pay in Sept (Catch Up) Partial Stop
Penalty fixed for Apr-Sept gap
File Next April Bill Sent
You owe Tax + Interest Penalty
Planning Note
If your income fluctuates wildly, ignore current income. Instead, pay 25% of last year’s total tax each quarter. This satisfies the “Safe Harbor” rule, and the IRS cannot penalize you, even if you owe a huge amount next April.

4. Strategy: The Safe Harbor Rule

This is the cheat code to avoid doing math 4 times a year.

  • The Rule: You will NOT be penalized if you pay at least:
    A) 90% of the tax for the current year, OR
    B) 100% of the tax shown on your prior year’s return.
  • High Earners (AGI > $150k): You must pay 110% of the prior year’s tax to be safe.
  • Strategy: Always aim for Option B. It’s a fixed number you already know.

5. Warning: The Q4 / January Trap

The end of the year is tricky.

⛔ The December Bonus

If you earn money in December, it falls into Q4 (Sep-Dec).

  • The Risk: If you forget to make the Jan 15th payment, you will be penalized for the Q4 underpayment, even if you file on time in April.
  • The Escape Hatch: If you file your full tax return and pay all taxes by January 31, you can skip the Jan 15 estimated payment entirely.

6. Frequently Asked Questions

Do W-2 employees pay this?
Usually, no. Employers withhold taxes automatically. However, if you have a side hustle or large investment gains (crypto/stocks), your W-2 withholding might not be enough, triggering the need for estimated payments.
What if I overpay?
You get a refund. Any excess estimated tax paid is returned to you when you file your annual return in April, just like a regular tax refund. You are simply “pre-paying” your bill.