Safe harbor rules
You avoid underpayment penalties by paying at least the smaller of 90% of current-year tax or 100% of prior-year tax (110% if prior-year AGI was over $150K). The percentages apply throughout the year via timely quarterly payments.
Who needs to pay estimates
Self-employed people, investors with large capital gains, retirees with IRA distributions, landlords, and anyone with inadequate withholding from a W-2 job.
Common questions
- Can I just pay once a year?
- No. The penalty is calculated quarter by quarter. Paying the whole year's estimate in Q4 still triggers penalties for the earlier quarters.
Related
Tax Planning
Year-round tax planning for individuals and business owners. We project the year's income quarterly and model decisions before they become tax liabilities.
Personal Income Tax Preparation
Federal and state 1040 preparation with year-round planning. We handle W-2, 1099, K-1, rental, and crypto income for individuals in Florida and all 50 states.
Filing a Tax Extension
Form 4868 extends the filing deadline from April 15 to October 15, not payment. Estimate and pay what you owe by April 15 or penalties and interest accrue.