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Glossary/Tax and regulatory

Estimated tax payments

Estimated tax payments are quarterly installments of income tax that individuals and corporations make during the year, and an underpayment penalty applies unless required amounts are paid by each installment due date.

CORAA TeamUpdated November 5, 2026

Definition

Estimated tax payments are installments of income tax paid during the year on income not subject to withholding. Individuals, including partners and S corporation shareholders, generally pay if they expect to owe $1,000 or more. Under section 6654, installments are due April 15, June 15, September 15 and January 15 of the following year. Corporations generally pay if they expect tax of $500 or more, with installments due on the 15th day of the fourth, sixth, ninth and twelfth months, which is April 15, June 15, September 15 and December 15 for a calendar-year corporation. A due date on a weekend or holiday moves to the next business day.

Why it matters in an audit or review

Payments tie into income taxes payable or receivable and the current tax provision. Auditors agree payments to bank records and tax account transcripts, and test whether penalties and interest were accrued.

Example

Illustrative: an individual's prior-year tax was $80,000 on adjusted gross income of $400,000, and the current-year tax is estimated at $100,000. Because prior-year income exceeded $150,000, the prior-year safe harbor is 110% x $80,000 = $88,000. The lesser of that and 90% x $100,000 = $90,000 is $88,000, or $22,000 per installment.

Common mistakes

  • Using 100% of prior-year tax when the 110% rule applies.
  • Applying the prior-year safe harbor to a large corporation, which is limited.

Sources

Definitions paraphrase AICPA and FASB guidance; read the standard itself before relying on a requirement. Example figures are illustrative. This page is guidance, not professional advice. Report an error

Standards

IRC 6654IRC 6655

Related terms

  • Business tax returns: Forms 1065, 1120 and 1120-S
    Form 1065 is the partnership return, Form 1120-S the S corporation return, and Form 1120 the C corporation return; the first two pass income to owners, while the third pays entity-level tax.
  • Accrued expenses
    Accrued expenses are costs incurred in a period but not yet paid or invoiced, such as wages, interest, utilities, and professional fees, recorded as liabilities under accrual accounting.
  • Prepaid expenses
    Prepaid expenses are payments made in advance for goods or services, such as insurance or rent, recorded as assets and expensed over the period of benefit.

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