---
name: "estimated_tax_payments"
description: "Plan quarterly estimated tax payments for self-employed and small business income: compare the safe harbor tests, figure self-employment tax, annualize uneven income with Form 2210 Schedule AI, set money aside as it arrives, and refigure later quarters when the year changes. Use when someone asks about quarterly taxes, Form 1040-ES, whether they will owe an underpayment penalty, how much to pay each quarter, or how to handle seasonal or lumpy income. US federal individual rules only."
---

# Estimated Tax Payments

## Purpose
Help a self-employed person, freelancer, partner, S corporation shareholder, landlord, or anyone with income that has no withholding work out what to pay the IRS each quarter, on which dates, and why that amount is enough. The goal is two things at once: no underpayment penalty, and no April surprise the person has not already reserved for.

This skill covers US federal estimated tax for individuals on Form 1040-ES. It is general education and planning help, not personal tax advice. State estimated tax, corporate estimated tax on Form 1120-W, and payroll tax deposits are separate systems. Say so when the question crosses into them, and point the person to a tax professional for a filing position you cannot verify from the IRS sources in references/key_facts.md.

## Workflow
1. **Find out if estimated tax is even required.** Ask for expected tax after withholding and refundable credits. If that balance is under $1,000, no penalty applies and payments are a cash choice. Work through the general rule in references/key_facts.md before assuming payments are due.
2. **Run the safe harbor comparison first.** Get prior year total tax and prior year AGI from the filed return, plus a current year total tax estimate from the Form 1040-ES worksheet. Run `bin/estimate.py safe-harbor`. Aim at the smaller target, and name the lane out loud: prior year lane for rising or unpredictable income, current year lane for flat or falling income.
3. **Build the current year estimate honestly.** Start from the prior return, update income, adjustments, deductions, and credits, and add self-employment tax with `bin/estimate.py se-tax` when there is business profit. A total that leaves out self-employment tax will underpay all year.
4. **Choose regular or annualized installments.** Income that is roughly even gets four equal installments. Income that arrives late, seasonally, or in lumps gets the annualized check in references/worksheet.md Step 3, run with `bin/estimate.py annualized`. If annualizing is used to figure payments, flag now that Form 2210 with Schedule AI goes with the return.
5. **Set the set-aside habit.** Agree a percent or a monthly target, move money to a separate tax account as income arrives, and true it up at each due date. Use `bin/estimate.py reserve` for the per receipt math. The habit matters more than the exact percent in the first year.
6. **Pay, record, and calendar.** Pay through one of the IRS methods in references/key_facts.md, save the confirmation, and record the amount, the date, the tax year, and the period in the worksheet. Then set the next due date before you close the task.
7. **Refigure when the year changes.** A large job, a lost client, a property or investment sale, a filing status change, or a big deductible purchase all trigger a new estimate. Run `bin/estimate.py amended` and reset the remaining installments with references/worksheet.md Step 4. Do not keep sending the January number out of habit.

## Output Contract
- **Safe harbor comparison:** both test amounts, the factor used for the prior year test and why, the required annual payment, and which lane was chosen.
- **Quarter plan:** the four real due dates for the tax year in question, after the weekend and holiday shift, with the amount due in each period and the cumulative amount that should be paid by each date.
- **Self-employment tax, when it applies:** net profit, the 92.35 percent step, the Social Security and Medicare parts split out, the total, and the deductible half.
- **Annualized plan, when used:** one required installment per period with the annualization factor and applicable percentage shown, plus the note that Form 2210 Schedule AI must be filed.
- **Amended plan, when the estimate changes:** the new total, the cumulative share due by the next date, payments already sent, the next payment, and what each remaining payment becomes.
- **Reserve habit:** the amount to move per receipt or per month, and the date of the next true up.
- **Caveat line** whenever a number depends on a projection: state that the payment rests on an estimate, name what would change it, and name the next check date.

## Operating Rules
1. Never invent a rate, threshold, wage base, deduction amount, or due date. Every figure in an answer comes from references/key_facts.md, from `bin/estimate.py`, or from a current IRS source you checked in this session. If you cannot verify it, say so and stop there.
2. Prior year total tax means the total tax line on the filed prior return. Never use the refund or the balance due from that return as the safe harbor base.
3. Check the 110 percent rule every time. Prior AGI over $150,000, or over $75,000 if married filing separately, raises the prior year test. Missing this is a quiet way to underpay all four quarters.
4. Treat the penalty as per period, always. Paying double in September does not erase a short April payment. When someone is already short, tell them to pay as soon as they can to stop the count, and be plain that the earlier period penalty stands.
5. Remember that withholding is treated as paid evenly through the year by default. For someone with a W-2 job plus side income, raising withholding late in the year can cover earlier periods in a way a late estimated payment cannot. Raise that option before adding more estimated payments.
6. Keep the prior year lane honest about April. It protects against the penalty, not against the balance. If projected tax is well above the required payment, build a separate reserve for the difference and say the expected balance out loud.
7. Never quote a card processor fee, an underpayment interest rate, or a state rule from memory. Those change. Send the person to the IRS payment page or the state revenue site for the current figure.
8. Use the actual payment periods, not calendar quarters. The second period is two months and the fourth is four months, and the due dates are Apr 15, Jun 15, Sep 15, and Jan 15. A plan built on Mar 31, Jun 30, Sep 30, and Dec 31 will be late.
9. Flag the special cases instead of folding them into the general math: farmers and fishers, fiscal year filers, nonresident aliens on Form 1040-ES (NR), a short or missing prior year, and someone who can skip the January payment by filing by Jan 31 and paying in full.
10. Keep records by period, not just by year. Income by period is what makes Schedule AI possible, and payment confirmations by period are what settle a penalty notice.

## Tooling
- `bin/estimate.py` - verified calculators. Run with `python3`. Every subcommand prints its inputs back, so a wrong input is visible in the output.
  - `safe-harbor --prior-tax P --prior-agi A [--filing-status single|mfj|mfs|hoh] [--current-tax C] [--withholding W] [--no-prior-year] [--farmer-fisher]` - compares the 90 percent current year test with the 100 or 110 percent prior year test, takes out withholding, and splits the result by quarter.
  - `se-tax --net-profit N [--w2-wages W] [--wage-base B]` - self-employment tax with the 92.35 percent step and the wage base cap on the Social Security part. Default wage base is the 2026 figure. Pass the right base for any other year.
  - `annualized --annualized-tax T1,T2,T3,T4 [--required-annual R]` - annualized income installment method from Worksheet 2-9 in Publication 505, including the smaller-of comparison and recapture when R is given. The four tax values are each figured on annualized income for the cumulative period.
  - `amended --amended-total T --already-paid P --next-period 2|3|4` - Worksheet 2-12 math for a refigured estimate. Reproduces the Publication 505 worked example: total $4,100, $900 paid, next period 3 gives a $2,175 payment and $1,025 after it.
  - `reserve --amount A --percent P` - moves a user chosen percent of one receipt into the tax reserve. The percent is a cash habit, never presented as a tax rate.
- `references/key_facts.md` - every rule and figure this skill relies on, with the IRS source for each one.
- `references/worksheet.md` - the quarter by quarter worksheet, the annualized check, the amended estimate steps, and four worked examples covering steady income, rising income, uneven income, and the self-employment tax piece.