Do I need to pay quarterly estimated taxes?

Why this exists

• Federal income tax is pay-as-you-go. Employees pay through withholding. If you have income with no withholding on it, estimated payments are the substitute.
• This is the single most common way self-employed people get hurt in their first year.

The penalty is for timing, not for owing

• The underpayment penalty can apply even if you pay everything by the filing deadline, because it is about paying enough as the year goes.
• The statute provides safe harbours based on your current-year tax and your prior-year tax. Meeting one of them is what protects you.

What it turns on

• your expected total tax for this year
• your total tax shown on last year's return
• how much is already being withheld from any wages
• when in the year your income is actually received

What would make it not apply

• you rely on a prior-year safe harbour but did not file a prior-year return
• your income is uneven across the year and you apply an even-quarters assumption without annualizing

The law, quoted

Sources: IRC §6654 · Pub 505 · Instructions for Form 1040. Each passage below is copied from the document VALID fetched, with the start of its SHA-256 fingerprint.

For purposes of subparagraph (A), the term "required annual payment" means the lesser of- (i) 90 percent of the tax shown on the return for the taxable year (or, if no return is filed, 90 percent of the tax for such year), or (ii) 100 percent of the tax shown on the return of the individual for the preceding taxable year. Clause (ii) shall not apply if the preceding taxable year was not a taxable year of 12 months or if the individual did not file a return for such preceding taxable year.

IRC §6654 — For purposes of subparagraph (A), the term "required annual payment" means the lesser of- · law in effect September 29, 2026 · fingerprint 253e09fdfaad

. It would be helpful for you to have a copy of your 2025 tax return and an estimate of your 2026 income nearby while reading this chapter. Also, keep in mind the items under What’s New for 2026 and the Reminders section, earlier. . Topics This chapter discusses: • Who must pay estimated tax, • How to figure estimated tax (including illustrated examples), • When to pay estimated tax, • How to figure each payment, and • How to pay estimated tax.

Pub 505 — 2. Estimated Tax for 2026 · fingerprint bebe926ec9e7