If you're self-employed, run a small business, or earn income the IRS doesn't withhold tax from automatically, you're probably supposed to be paying estimated taxes four times a year. The fourth payment, covering income earned from September through December, is due January 15, 2027. It's easy to lose track of, usually because the holidays get busy and the deadline lands just after the new year, without the same fanfare as April 15th.
Who actually needs to pay quarterly
S-corp shareholder-employees generally have tax withheld from their wages, so estimates are typically needed for other income, such as distributions beyond reasonable wages, K-1 income, rental income, or interest. If your only income is a W-2 with taxes withheld, you likely don't need to think about this at all.
How to estimate what you owe
You don't need an exact number: you need a reasonable one, recalculated each quarter as your income becomes clearer. A simple approach:
- Add up net income for the year so far, and project it forward through year-end.
- Apply your expected effective tax rate (federal, plus Arizona state tax if it applies to you).
- Subtract anything already withheld or paid in prior quarters.
- What's left is the amount to pay by January 15, the one payment remaining for this tax year.
The IRS also allows a "safe harbor": paying at least 90% of this year's actual liability, or 100% of last year's (110% if last year's adjusted gross income was over $150,000, or over $75,000 if married filing separately), spread evenly across the four payments. Hitting safe harbor protects you from a penalty even if your final number moves.
What happens if you skip it
Missing a quarter doesn't erase the payment. It just becomes part of what you owe next April, plus an underpayment penalty calculated on a quarter-by-quarter basis, roughly tracking short-term interest rates. It's rarely catastrophic, but it's also entirely avoidable with a running estimate and a calendar reminder.
If you'd rather not run this math yourself every quarter, that's exactly the kind of thing we handle as part of ongoing bookkeeping and tax planning. Reach out before January 15 and we'll get you a real number, not a guess.