If you are self-employed or own a small business in the US, you are required to pay taxes four times a year — not just once at filing time. Missing these payments results in penalties even if you pay everything you owe by April 15. Here is everything you need to know.
What Are Quarterly Estimated Taxes?
When you work as an employee, your employer withholds federal and state income tax from every paycheck. When you are self-employed or own a pass-through business like an LLC or S-Corp, no one withholds taxes for you. The IRS requires you to estimate your annual tax liability and pay it in four instalments throughout the year.
These payments cover federal income tax and self-employment tax — the 15.3% tax on net self-employment income that covers Social Security and Medicare.
Who Must Pay?
You must pay quarterly estimated taxes if you expect to owe at least $1,000 in federal tax for the year after subtracting withholding and credits. Most self-employed individuals, sole proprietors, LLC members and S-Corp shareholders who receive distributions meet this threshold.
If your S-Corp pays you a salary with payroll tax withholding, that withholding counts toward your tax obligation — but if your distribution income is large, you may still need to make additional estimated payments.
The 2026 Payment Deadlines
The four quarterly deadlines for 2026 are April 15 for income earned January through March, June 16 for income earned April and May, September 15 for income earned June through August and January 15 2027 for income earned September through December.
Missing any of these deadlines triggers an underpayment penalty calculated at the IRS interest rate plus 3%, applied to the amount underpaid for each day it remains unpaid.
How Much Should You Pay?
There are two safe harbour methods for calculating quarterly payments. The first is to pay 100% of your prior year tax liability divided into four equal payments. If your adjusted gross income was above $150,000, pay 110% of the prior year liability. This method is safe regardless of what you actually earn this year.
The second method is to estimate your current year income and pay 25% of your estimated annual tax liability each quarter. This requires more calculation but avoids overpaying if your income is lower than the prior year.
How to Make the Payments
The easiest way to pay is through the IRS Direct Pay system at irs.gov/payments — free, instant and requires no account setup. You can also pay via the Electronic Federal Tax Payment System, by phone or by mailing a check with Form 1040-ES.
Most states with income tax also require quarterly estimated payments on a similar schedule. Check your state’s revenue department website for deadlines and payment methods.
Common Mistakes
The most common mistake is skipping payments because income was lower in a particular quarter and planning to catch up later. The penalty is calculated per quarter — catching up later does not eliminate the penalty for the missed quarter.
The second mistake is calculating payments based only on income tax and forgetting self-employment tax. SE tax significantly increases the total quarterly obligation for sole proprietors and LLC members.
How Auxilio Helps
We calculate quarterly estimated tax payments for all our tax clients, send payment reminders before each deadline and adjust the calculations mid-year if your income changes significantly. We also ensure your S-Corp salary is set at a level that minimises both payroll tax and the need for large quarterly payments.
Book a free call to get your quarterly tax payments organised correctly for the rest of 2026.