Quarterly tax planning means checking your numbers four times a year and paying estimated tax as you earn, not all at once in April. The IRS expects tax to be paid during the year [1]. When no one withholds tax from your business profit, quarterly tax planning is how you pay on time and avoid an underpayment penalty [1][2].
Who has to pay estimated tax
Estimated tax is tax you send the IRS yourself during the year, because no employer is taking it out of a paycheck.
Do you run your business as a sole proprietor, a partner or an S corporation owner? Then you generally need estimated payments once you expect a tax bill of $1,000 or more at filing time [1]. A corporation that pays its own tax, such as a C corporation, hits that line at $500 [1]. Quarterly tax planning starts with knowing which group you are in.
There is one exception. Say you were a U.S. citizen or resident all through 2025, and you owed no tax for that full year. Then 2026 estimated payments are not required [2]. “No tax liability” means your total tax was zero, or you did not have to file at all [2].
Self-employment tax belongs in your quarterly tax planning too. That is the social security and Medicare tax on your own business profit, at a rate of 15.3% [3]. Your estimated payments can cover it [3].
The 2026 due dates for quarterly tax planning
The IRS splits the year into four payment periods, each with its own due date [1]. For 2026, Form 1040-ES lists these dates [2]:
| Payment | Due date |
|---|---|
| 1st | April 15, 2026 |
| 2nd | June 15, 2026 |
| 3rd | September 15, 2026 |
| 4th | January 15, 2027 |
The January payment is optional in one case. File your 2026 return by February 1, 2027 and pay the whole balance with it [2]. Due date on a weekend or federal holiday? Paying the next business day counts as on time [1].
You may also pay more often, such as monthly, as long as enough is paid by the end of each period [1].
How much to pay to avoid a penalty
Quarterly tax planning does not mean guessing your tax to the dollar. Form 1040-ES gives two targets [2]. In most cases you must pay estimated tax if both of these are true [2]. First, you expect to owe at least $1,000 after withholding and refundable credits. Second, those will cover less than the smaller of:
- 90% of the tax on your 2026 return, or
- 100% of the tax on your 2025 return, if that return covered all 12 months.
There is a higher bar for higher incomes. Did your 2025 adjusted gross income (your income after certain deductions) top $150,000? ($75,000 if married filing separately.) Then the prior-year target is 110% of last year’s tax, not 100% [2].
The prior-year target is often the easiest one for quarterly tax planning, because you already know the number. Meeting a target avoids the penalty, but any tax still unpaid is due with your return [2].
A penalty can apply even if you end up getting a refund, if a payment was late [1]. So each due date counts on its own.
4 simple steps for quarterly tax planning
Here is a short quarterly tax planning routine to follow each quarter.
1. Close the books for the quarter. Record income and expenses, and check that your books agree with your bank statements. Old numbers give you a wrong estimate. Good bookkeeping makes the rest of this quick.
2. Update your estimate. Start from last year’s return, as the IRS suggests, then adjust for how this year is really going [1]. Include self-employment tax [3].
3. Pick your target and pay. Pay a quarter of your yearly target by each due date, unless you use the annualized method below [2]. You can pay online, by phone or through your IRS online account [1]. Businesses can also pay through a business tax account or Direct Pay for businesses [1].
4. Set money aside for next time. Move a share of each month’s profit into a separate account, so the next payment does not squeeze your cash.
If you also get a salary, there is another route. You can ask your employer to withhold more tax by filing a new Form W-4, which can replace some or all estimated payments [1][2]. If you are an S corporation owner who takes a salary, this route may work for you.
Quarterly tax planning when income is uneven
Seasonal businesses and owners with a big gain late in the year do not have to pay four equal amounts. The annualized income installment method lets you figure each payment from what you actually earned so far [1][2]. You show this on Form 2210, including Schedule AI (the worksheet for that method), when you file [2].
The penalty can also be waived in a few cases [1]. One is a casualty (sudden damage like a fire or storm) or a disaster. Another is if you retired after age 62 or became disabled and had reasonable cause, meaning a good reason, not neglect [1].
What quarterly tax planning does for your business
Paying on time is the floor. The real use of a quarterly check is seeing problems early.
Quarterly tax planning shows you where the year is heading while there is still time to act. You can see if profit is ahead of plan. You can decide if a big equipment buy makes sense this year. And you know how much cash to hold back. As our advanced tax planning services page puts it, “Smart tax strategy requires year-round planning and action.” For the bigger picture, read why tax planning matters.
Limits and risks
- Estimates are estimates. Quarterly tax planning aims for the target, but any tax still unpaid is due with your return [2].
- Rules differ for some. Farmers, fishermen and higher-income taxpayers have special rules [1][2].
- Corporations use different forms. A C corporation’s underpayment is figured on Form 2220, not Form 2210 [1].
- State taxes are separate. Your state may have its own estimated tax rules. Check them too.
- Already behind? If you owe for past years, that may need attention too. See our tax resolution services for back taxes and IRS letters.
How we can help
Hemlock Financial Group’s advanced tax planning services are built around year-round planning. Want help with your quarterly tax planning routine and payment amounts? Then book a consultation.
Frequently asked questions
What happens if I miss a quarterly payment?
You may owe a penalty for that period, even if you get a refund when you file [1]. Paying as soon as you can limits it.
Do S corporation owners pay estimated tax?
Often, yes. The IRS lists S corporation shareholders among those who generally must pay if they expect to owe $1,000 or more [1]. Extra withholding from your own wages can cover some or all of it [1][2].
Can I pay all my estimated tax at once?
Yes. Form 1040-ES says you can pay it all by April 15, 2026, or in four equal amounts [2].
Is the January payment for this year or next?
The January 15, 2027 payment is the fourth payment for 2026 [2].
This article is for informational and educational purposes only. It is not tax, legal or financial advice for your situation. Tax rules change, so talk with a qualified professional before you act.
Sources
- Estimated taxes, Internal Revenue Service: who must pay ($1,000 for individuals including sole proprietors, partners and S corporation shareholders; $500 for corporations), four payment periods, weekend rule, ways to pay, paying more often, W-4, penalty even with a refund, annualizing, waivers, Forms 2210 and 2220
- Form 1040-ES, Estimated Tax for Individuals (2026), Internal Revenue Service: the 90% and 100% rule, the 110% rule over $150,000 AGI, the no-liability exception, 2026 due dates, skipping the January payment, annualized method and Schedule AI
- Self-employment tax (Social Security and Medicare taxes), Internal Revenue Service: the 15.3% rate and paying it through estimated tax
