Why the safe-harbor figure is the one to aim at
The IRS does not ask you to have worked out your tax exactly by the time each date comes round, and it is a good thing too, because nobody has. What it asks is that you have paid enough along the way to avoid the underpayment penalty. The rule for that is written out plainly: you avoid the penalty if your return shows you owe less than 1,000.00 after subtracting withholding and credits, or if you paid at least 90% of this year's tax or 100% of the tax on last year's return, whichever of those two is smaller. If last year's adjusted gross income was over 150,000.00 (75,000.00 for a separate return), the prior-year figure becomes 110% in place of 100%.
That smaller figure is what this page calls the required annual payment, and it is the number worth aiming at, because it is the least you can pay and stay clear of the penalty. Two things follow from it that a single "your tax divided by four" number hides. The first is that the target is not simply this year's tax: if last year was a fat year and this one is thin, the prior-year route can ask for less, and if last year was thin and this one is fat, 90% of this year is the smaller and that is what you need. The second is that the two routes are compared, not guessed at, and the page shows which one won and by how much.
This is also why the page asks for what you have already paid. If you are behind, the amount still to pay is a real figure and so is the catch-up on each installment left, and both are arithmetic on numbers you supply rather than a nudge to estimate better next time. If you have already covered the whole thing, the page says so instead of showing a payment that does not exist.
What each figure is
- Estimated tax for the year = income × your rate ÷ 100. The page's own arithmetic stops here: it does not know your brackets and does not guess a rate.
- Required annual payment = the smaller of 90% of that year figure and 100% (or 110%) of last year's tax, when last year's tax is entered. With no last year's tax entered it is 90% of this year's figure alone, and the page says which route it used.
- Each quarterly payment = the required annual payment ÷ 4. Four equal installments is the method here.
- Already paid or withheld = the figure you typed, however many installments it covers.
- Still to pay this year = required annual payment − already paid, and never below zero.
- Each installment left = still to pay ÷ the number of installments not yet covered by what you have paid.
Worked example
1099 income of 90,000.00 expected for the year, an effective rate of 22.00% typed in, nothing paid yet, and last year's total tax 15,000.00 with last year's adjusted gross income under 150,000.00.
The year's tax is 90,000.00 × 0.22 = 19,800.00. The two safe-harbor figures are 90% of this year, 19,800.00 × 0.90 = 17,820.00, and 100% of last year, 15,000.00 × 1.00 = 15,000.00. The smaller is 15,000.00, so that is the required annual payment, and it is the prior-year route that wins here.
Four equal installments of 15,000.00 ÷ 4 = 3,750.00 each, due April 15, June 15, September 15 and January 15 of the following year. Nothing has been paid, so all 15,000.00 is still to pay and each of the four installments is 3,750.00.
Now move two things. Give last year an adjusted gross income of 150,000.00 or more and the prior-year figure becomes 110% of 15,000.00 = 16,500.00 — still below the 17,820.00 the 90% route asks for, so the required annual payment rises to 16,500.00 and each installment to 4,125.00. Raise last year's tax instead, to 20,000.00, and 110% of it is 22,000.00, which is now above the 90% figure, so 17,820.00 is the smaller and the 90% route is the one to aim at after all. The page shows which way it fell rather than assuming one.
Pay the first installment of 3,750.00 and the page moves: one of the four is covered, 11,250.00 is still to pay, and spread over the three installments left that is 3,750.00 each. Nothing about the annual target changed; only what is left of it did.
Same income, same rate, same 15,000.00 of last year's tax — only the prior-year multiplier moved, and it moved the required annual payment by 1,500.00 and each installment by 375.00.
What this page does not do
- No bracket table, no rate of its own. The rate is yours to type. The page does not work out your tax from your income the way a filing-time calculator does, does not hold a bracket table, and does not pick a rate.
- No self-employment tax split out. Self-employment tax rides along inside the rate you type if you put it there; the page does not separate the income tax from the Social Security and Medicare part.
- No state or local estimated tax. Every figure here is one layer. A state that wants its own quarterly payments runs on its own rules and its own dates, and is not this calculation.
- No annualized, uneven installments. The page divides the required payment into four equal parts. If your income arrives unevenly, the annualized income installment method can lower what the early periods ask for, and that is worked out on Form 2210, not here.
- No penalty figure. The page tells you the amount that keeps the underpayment penalty away; it does not compute the penalty itself, its rate, or the interest that can come with it.
- No forecasting of your income. The income and the rate are figures you supply. The page does not project, model or predict them, and it holds no data of its own to do it with.
- No account, nothing emailed, nothing saved. There is no sign-in and nothing you type leaves the browser. Nothing is put on a list and nothing is sent to an inbox.
- No advice. The page gives the arithmetic of the installments, not a recommendation, and it has no view on what rate you should use or what you should do with a shortfall.
Rounding
Figures are rounded down, never up — the same rule as the rest of the site. Amounts and percentages to two decimals. The four installments are each the required annual payment divided by four and shown to two decimals, so adding the four displayed installments back up can land a cent or two below the displayed annual figure; the division is what the page does, and the annual figure is the one to check against.
Frequently asked questions
How is the quarterly payment worked out?
In three steps. Your income times your rate gives the year's estimated tax; that figure, or last year's tax, sets the required annual payment through the safe harbor; and the required annual payment divided by four gives the installment shown against each due date. Every one of those steps is printed under the result, with your own numbers in it, so the sum can be followed rather than taken on trust.
Do I have to pay estimated taxes at all?
For an individual, generally yes, once you expect to owe 1,000.00 or more when the return is filed and your withholding and refundable credits will not cover it. That is the IRS's own threshold, and it is on the estimated taxes page this page links to. If you had no tax liability at all last year, were a citizen or resident for the whole year and last year covered a full twelve months, the IRS says you do not have to pay it for this year.
What is the 110% figure for?
It replaces the 100% when last year's adjusted gross income was more than 150,000.00 (75,000.00 filing a separate return). So a higher-income filer has to have paid 110% of last year's tax, not 100%, for the prior-year route to clear the penalty. Pick it in the box above and the page uses 1.10 in place of 1.00 for that half of the comparison — and still takes whichever of the two routes asks for less.
What if I have already paid one or more quarters?
Enter the total you have paid or had withheld and the page works out how many of the four installments that covers, what is still to pay for the year, and what that leaves against each installment that remains. Paying a quarter exactly moves the count by one; the annual target does not move at all.
Is this the same as a 1099 tax calculator?
Only in part. A 1099 is the reason most people are here, because that income arrives with nothing withheld all year, so there is no employer holding anything back and the quarterly payments are how the tax gets paid as the money comes in. What this page cannot do is turn 1099 income into a tax figure the way a filing-time calculator does; it takes the income and a rate, and from those it works out the installments. Self-employment tax is inside your rate if you put it there, and not separated out.
Why does a short payment not simply add to the next one?
Because the penalty is charged by period, not by year: falling short of April 15 is judged against April 15, even if a later payment would bring the year's total up. That is why each due date carries its own installment here rather than one lump figure split loosely, and why the catch-up line splits what is left across the installments remaining instead of pushing it all to the end.