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Estimated Tax Payments

By: Tax Hotline
Summer 2026 (Vol. 44, No. 2)

Q: I am retiring this year and won’t have my company paying in taxes for me. How do I make sure I don’t get hit with a big tax bill next year?

A: Most retirees receive income primarily from Social Security, RMDs (required minimum distributions from retirement accounts), and a pension — with no more W-2 withholding — and many need to make quarterly estimated tax payments to the IRS to avoid underpayment penalties.

Step 1: Figure Out If You Need to Make Estimated Payments.

You generally must pay estimated taxes if you expect to owe $1,000 or more in federal tax for the year after subtracting any withholding.

  • Social Security: Up to 85% may be taxable depending on your total “combined income” (your AGI + nontaxable interest + half of SS benefits). There may be new senior deductions in 2026 that help many retirees.
  • Pension and RMDs: Fully taxable as ordinary income.
  • Use last year’s tax return as a starting point and adjust for retirement changes.
  • Best tool: IRS Form 1040-ES (Estimated Tax for Individuals) includes a worksheet to calculate this. Download the latest 2026 version from IRS.gov.
Step 2: Calculate Your Quarterly Payments.

Use the Estimated Tax Worksheet in Form 1040-ES or IRS Publication 505. Common safe approaches include:

  • Pay 90% of the tax you expect to owe for 2026, OR...
  • Pay 100% of the tax you owed on your 2025 return (110% if your 2025 AGI was over $150,000). This is the easiest “safe harbor” to avoid penalties.
  • Divide the total into 4 quarterly payments (or adjust if income arrives unevenly).
Step 3: Quarterly Due Dates for 2026 are Expected to Be Similar in 2027
  • Q1: April 15, 2026
  • Q2: June 15, 2026
  • Q3: September 15, 2026
  • Q4: January 15, 2027

You can make federal estimated tax payments payments online, by phone, through the mail or via the mobile app. When paying, select ‘Estimated Tax’ as your reason for payment and select ‘1040ES’ for the tax form. Then select the tax year you want the payments to apply to. The following section highlights some popular payment options.

Step 4: How to Make the Payments
  • IRS Direct Pay at irs.gov/payments/direct-pay This is a free option where you can make one time payments from your bank account.
  • EFTPS (Electronic Federal Tax Payment System): Go to ettps.gov. You will need to enroll first which can take a few days to process but this option is good for setting up recurring or advance payments. You can pay with Credit/debit card or digital wallet but convenience fees will apply.
  • Mobile App: Download the IRS2Go mobile app to make payments from your mobile device.
  • By mail: If you prefer sending a check, you can mail it along with a Form 1040-ES voucher.

    • Some alternate tips are to set up payments to be withheld for you. Many pensions allow you to request federal tax withholding directly (Form W-4P). This can reduce or eliminate the need for estimated payments. RMDs usually have optional withholding - ask your plan administrator.

    It’s a good idea, to re-calculate your estimated taxes mid-year if your income changes significantly. Be sure to keep track of each payment you make. You will need to know the total so you can note payments made and get credit for these when you file your 2026 tax return.

    Q: Does an LLC or Corporation have to make estimated taxes?

    A: Yes. LLCs and Corporations generally are required to make estimated federal tax payments if they expect to owe above specific thresholds.

    LLCs are considered pass-through entities so the profits and losses pass through to the owners’ personal tax return. If you are a single member LLC (sole proprietor) you will need to estimate your total annual tax liability (income and self employment tax) If this is more than $1,000 you will need that amount by four and make your payments using the options listed above. If it is a multi member LLC (partnership) and expect to owe more than $1,000, each partner pay individually on their shared portion of the profits.

    A C-Corp must make quarterly estimated payments if it expects it’s tax liability to be above $500. The IRS Corporate Estimated Tax Worksheet can be used to calculate the payments and they must be submitted electronically via the EFTPS system.