I'll get straight to it, because that's apparently my whole brand: if you pay estimated taxes, your third quarter payment is due September 15. Not "sometime in September." Not "after Labor Day, probably." September 15th. Mark it, tattoo it, whatever gets it into your calendar.
I know what a lot of you are doing right now. You're thinking, "Trish, I'll deal with it when I deal with it, the IRS isn't exactly breathing down my neck." Respectfully — they don't need to breathe down your neck. They just quietly add an underpayment penalty and let compound math do the intimidating for them. It's less dramatic than a scary letter and somehow more effective.
Quick refresher on who this applies to: If you're self-employed, running a small business, or have significant income that doesn't have taxes withheld from it — rental income, investment gains, that consulting gig that turned into a real thing — you're probably on the hook for quarterly estimated payments. If you've never had a conversation with your CPA (me, ideally) about whether you should be paying quarterly, that's worth a five-minute phone call before September 15th, not after.
Here's the part people actually want to know: how much?
The honest answer is "it depends on your income this year," which I realize is the most CPA sentence ever written. But roughly: you want to have paid in, through withholding and estimates combined, either 90% of what you'll owe for 2026, or 100% of what you owed last year (110% if last year's income was north of $150,000). Hit one of those two numbers and the penalty goes away, even if your actual tax bill ends up higher.
If your income has swung a lot this year — good year, bad year, sold something, closed a deal you weren't expecting — this is exactly the moment to recalculate rather than just sending in the same number as last quarter out of habit. I've had clients who overpaid by thousands because they were running Q1's numbers all the way through Q4. I've also had clients who underpaid because business was better than expected and nobody adjusted. Neither one is a great surprise to find out about next April.
What happens if you miss it?
Nothing catastrophic, nothing dramatic, no one shows up at your door. You just get charged an underpayment penalty that's calculated like interest — currently running around 7-8% annualized on whatever the shortfall was, for however long it was outstanding. It's not the end of the world. It's also just money you're handing over for absolutely nothing in return, which as your accountant I find personally offensive on your behalf.
The move: If you already know your number, pay it. If you're not sure, or this year looked different from last year, give me a call before the 15th and we'll run it properly instead of guessing. Takes less time than you think, and a lot less time than unwinding a penalty in April.
Patricia A. Beckwith, CPA works with individuals and small business owners throughout Santa Cruz County who'd rather plan ahead than get surprised. If you need to talk through your Q3 estimate before September 15th, reach out — that's literally what I'm here for.
Recent Comments