How to Pay Advance Tax: Deadlines, Methods & Underpayment Penalties

To pay advance tax to the IRS, estimate your total federal tax for the year, subtract any withholding and refundable credits, divide the remainder into four quarterly installments, and send each one by its due date using IRS Direct Pay, EFTPS, a debit or credit card, or a check mailed with the Form 1040-ES voucher. These payments, formally called estimated tax payments, are required if you expect to owe $1,000 or more after withholding.¹

Do You Actually Have to Make These Payments

The federal system runs pay-as-you-go. If you’re a W-2 employee, your employer withholds tax from every paycheck and you probably meet the requirement without doing anything. Estimated payments exist for income where nobody withholds for you: freelance and self-employment work, rental income, investment gains, interest, dividends, and retirement distributions without elected withholding.

You owe no penalty if the tax remaining after withholding and refundable credits is under $1,000.¹ Above that, you’re in the clear if your total withholding plus estimated payments equals at least the lesser of:

90% of your current-year tax, or
100% of the tax on your prior-year return (which must cover a full 12 months and must have been filed).²

Higher earners have a stricter version. If your adjusted gross income last year was over $150,000 ($75,000 if married filing separately), the prior-year safe harbor rises from 100% to 110%.¹ For someone whose income swings year to year, that prior-year number is usually the easiest target to hit, because you already know it.

Two exceptions worth naming. If you had zero tax liability last year and were a U.S. citizen or resident for the full year, you’re off the hook this year regardless of what you expect to owe. And if you have no prior-year return at all, the 100%/110% safe harbor isn’t available; aim for the 90% current-year figure instead.

Figuring Out How Much to Send

The IRS publishes Form 1040-ES with a worksheet that walks the calculation line by line.³ The logic:

Start with expected adjusted gross income for the year. Subtract either the standard deduction or your projected itemized deductions. Apply the year’s tax rate schedules (printed in the 1040-ES instructions) to the taxable income that remains. Add self-employment tax if it applies; the combined rate is 15.3%, covering Social Security at 12.4% up to the annual wage base and Medicare at 2.9% on all earnings, plus an additional 0.9% on earnings above $200,000 for single filers or $250,000 for joint filers.

Then subtract the credits you expect to claim and any tax being withheld from W-2 wages, pensions, or other sources. What’s left is your estimated tax for the year. Line 15 of the worksheet tells you to divide by four to get each quarterly installment.³

You don’t need surgical accuracy. Use last year’s return as a baseline and adjust for known changes: a new client, a departure, a filing-status change, a big deduction gained or lost. Overshooting produces a refund. Undershooting produces a penalty on the shortfall.

The Four Deadlines

Estimated payments are called quarterly, but the periods aren’t equal. Each installment covers a specific window:⁴

January 1 through March 31: payment due April 15
April 1 through May 31: payment due June 15
June 1 through August 31: payment due September 15
September 1 through December 31: payment due January 15 of the following year

The second window is only two months long, so the June 15 deadline arrives faster than most people expect after the April payment. When a due date lands on a weekend or federal holiday, it slides to the next business day.⁴

Missing a deadline starts interest running on the underpaid amount from that due date, even if you’ll ultimately be owed a refund at filing. The IRS calculates the shortfall separately for each quarter, so paying extra in Q3 doesn’t erase a Q2 miss.

Your first-quarter number doesn’t lock you in. If income changes materially mid-year, redo the 1040-ES worksheet and adjust the remaining installments up or down.⁵ Waiting until Q4 to catch up often means you’ve already triggered penalties for the earlier quarters.

Ways to Send the Payment

Free Electronic Options

IRS Direct Pay pulls funds directly from a checking or savings account at no cost, with no registration. It’s the simplest choice for one-off payments.⁶

EFTPS, the Electronic Federal Tax Payment System, is a free government portal with more features: scheduling up to 365 days ahead, email confirmations, and 15 months of payment history.⁷ Enrollment takes a few days, so set it up well before a deadline rather than the night of.

Card and Mobile

You can pay by credit card, debit card, or digital wallet through IRS-authorized processors, including through the IRS2Go app.⁸ Processor fees apply and the IRS doesn’t set them. Debit runs roughly $2.10 to $2.15 flat per payment, credit runs about 1.75% to 1.85%.⁹ A $5,000 credit-card payment costs about $90 in fees. Unless card rewards clearly offset that, the free bank-transfer options are the better deal.

Check or Money Order

Mail a check or money order with the payment voucher from Form 1040-ES. Write your Social Security number, the tax year, and “Form 1040-ES” on the payment so the IRS applies it to the right account and year.¹⁰ Mailing addresses vary by state and are printed in the 1040-ES instructions. You get no instant confirmation, and delivery time counts against your deadline.

Applying Last Year’s Refund

On your annual return, you can elect to apply part or all of an overpayment toward this year’s estimated tax rather than take it as cash. The amount counts toward your first installment. Once you make that election, you generally can’t reverse it after the filing deadline and ask for the cash back instead.¹¹

Using W-4 Withholding Instead

If you also have a regular job, you may not need to make separate quarterly payments at all. Ask your employer to withhold additional tax on a fresh Form W-4. The IRS explicitly points to this as a convenient option for people with self-employment or gig income alongside wages.¹²

Withholding has a quiet advantage: the IRS treats withheld tax as paid evenly across the year, regardless of when it actually came out of your paycheck. So if you realize in November you’re behind, boosting withholding on the last few paychecks of the year can retroactively cover earlier quarters. Estimated payments only count as of the date you send them.

When Your Income Is Uneven

Splitting the year’s tax into four equal chunks works if income arrives steadily. It doesn’t work well if you earn most of your income in one part of the year, sell appreciated stock in July, or run a seasonal business. Paying a quarter of your annual tax in April when you barely earned anything that quarter ties up cash for no reason.

The annualized income installment method exists for this. Instead of assuming even income, it calculates what you actually owed based on income received through each quarterly cutoff. You use Schedule AI on Form 2210, filed with your annual return.¹³ The math takes more work, but for genuinely lumpy income it can shrink or eliminate the penalty on the light quarters.

What Happens If You Underpay

The underpayment penalty isn’t a flat fine; it’s essentially interest on the amount you should have paid, accruing from each quarterly due date until you pay it or until the filing deadline arrives, whichever comes first. The IRS resets the rate every quarter based on the federal short-term rate plus three percentage points.¹⁴ For early 2026, the rate is 7% for Q1 and 6% for Q2, compounded daily.¹⁵

Each quarter is scored on its own. Overpaying later doesn’t retroactively fix an earlier miss, though excess in one quarter carries forward and reduces the shortfall in later ones. A $10,000 underpayment held for a full quarter at 7% runs roughly $175. Not devastating, but avoidable, and it stacks across quarters and years.

In limited situations, the IRS can waive the penalty entirely. The two main grounds are a casualty, disaster, or other unusual circumstance where the penalty would be unfair, and retirement after age 62 or becoming disabled within the past two years with reasonable cause for the underpayment.¹⁶ Request the waiver by filing Form 2210 with your return and attaching a signed written explanation; for retirement or disability grounds, include documentation of the date and your age.¹³ The IRS decides case by case.

Don’t Forget Your State

Federal estimated tax is only half the picture in most of the country. Most states with an income tax require their own quarterly payments on a similar schedule, but the thresholds and deadlines vary. Some states start requiring estimated payments at expected liability as low as $100; others match the federal $1,000 floor. Check your state’s revenue or taxation department for its exact rules. State penalties are separate from federal ones and stack on top.

1
Office of the Law Revision Counsel. 26 USC 6654 – Failure by Individual to Pay Estimated Income Tax
2
Internal Revenue Service. Topic No. 306, Penalty for Underpayment of Estimated Tax
3
Internal Revenue Service. Form 1040-ES – Estimated Tax for Individuals
4
Internal Revenue Service. Frequently Asked Questions – Estimated Tax – Individuals
5
Internal Revenue Service. Estimated Taxes
6
Internal Revenue Service. Direct Pay With Bank Account
7
Internal Revenue Service. EFTPS – The Electronic Federal Tax Payment System
8
Internal Revenue Service. IRS2Go Mobile App
9
Internal Revenue Service. Pay Your Taxes by Debit or Credit Card or Digital Wallet
10
Internal Revenue Service. Pay by Check or Money Order
11
Taxpayer Advocate Service. Held or Stopped Refunds
12
Internal Revenue Service. Pay As You Go, So You Won’t Owe: A Guide to Withholding, Estimated Taxes, and Ways to Avoid the Estimated Tax Penalty
13
Internal Revenue Service. Instructions for Form 2210
14
Internal Revenue Service. Internal Revenue Bulletin 2026-8
15
Internal Revenue Service. Quarterly Interest Rates
16
Internal Revenue Service. Underpayment of Estimated Tax by Individuals Penalty