Quick answer: If you own a business and no employer withholds tax from that income, you are generally expected to pay federal and New York estimated taxes four times a year. For individuals the due dates are usually April 15, June 15, September 15, and January 15 of the following year. Paying at least the prior year's tax, or a higher percentage if your income is above the IRS threshold, in four even installments generally protects you from underpayment penalties even if you owe more when you file.

Estimated taxes are the bill that catches new owners off guard. A salaried employee never thinks about them because the employer handles it. Once you own a sole proprietorship, a partnership interest, or an S corporation, the responsibility shifts to you, and the IRS and New York both expect to be paid as the income is earned, not in one lump in April.

Who needs to make estimated payments

Generally, you need to make estimated payments if you expect to owe a meaningful amount of federal tax when you file, after subtracting withholding and credits. The IRS explains the current threshold on its estimated taxes page. In practice that includes most:

  • Sole proprietors and single-member LLC owners.
  • Partners and LLC members, because partnerships do not withhold on owners' shares of income.
  • S corporation shareholders whose share of profit exceeds what their W-2 withholding covers.
  • Landlords with net rental income.

C corporations make their own estimated payments, generally due on the 15th day of the 4th, 6th, 9th, and 12th months of the tax year. The rest of this article focuses on owners of pass-through businesses, which describes most of the companies we work with in Central New York.

The due dates and how they really work

For calendar-year individuals the four federal installments are generally due April 15, June 15, September 15, and January 15. When a date falls on a weekend or holiday it moves to the next business day. Notice the periods are not even: the second "quarter" covers only two months and the fourth covers four.

New York State estimated payments for individuals follow the same schedule. You can pay federal through IRS Direct Pay or your online account, and New York through your Online Services account with the Tax Department. For more on the state side, see our article on New York estimated tax payments.

Safe harbor: the simplest way to avoid penalties

The underpayment penalty is essentially interest charged on each installment that was short or late. You can avoid it by paying, in timely and roughly equal installments, the smaller of:

  1. 90% of the current year's tax, or
  2. 100% of the prior year's tax, rising to 110% if your prior-year adjusted gross income was above $150,000 ($75,000 if married filing separately).

The prior-year method is popular with business owners because it is a known number. If you owed $40,000 in total federal tax last year and your income was above the threshold, paying $11,000 each quarter generally keeps you penalty-free this year, even if your business has a record year. You will still owe the balance in April, so set that money aside.

New York has its own safe harbor rules that are similar but not identical, so check both before relying on one number.

Strategies for uneven or growing income

Seasonal businesses and owners with lumpy income have a few options worth knowing:

  • Annualized income method. If most of your income arrives late in the year, you can calculate each installment based on what you actually earned through that period, using Form 2210, Schedule AI. It takes more work but can reduce or eliminate penalties.
  • Increase W-2 withholding. S corporation owners can have extra tax withheld from their own paychecks. Withholding is treated as paid evenly throughout the year no matter when it occurs, so a large December withholding can cover a shortfall in earlier quarters.
  • Use a December check-in. A quick look at year-to-date profit in late fall lets you adjust the January payment instead of being surprised in April.
  • Consider the PTET. If your entity has elected New York's pass-through entity tax, the entity makes its own estimated payments and owners receive a credit. That changes how much the owners personally need to pay. Our article on the New York pass-through entity tax explains the election.

Keep it simple with a routine

The owners who never struggle with estimates are the ones who treat them like rent. A few habits that help:

  1. Move a set percentage of each deposit into a separate tax savings account.
  2. Put all eight federal and state due dates on the calendar in January.
  3. Keep confirmations of every payment with your tax records.
  4. Revisit the amounts mid-year if business is running well ahead of or behind last year.

Frequently asked questions

What if I miss an estimated payment?

Make it as soon as you can. The penalty is calculated like interest on the late amount for the number of days it was late, so a payment a few weeks late costs far less than one skipped entirely. There is no separate late-filing penalty for estimates themselves.

Do I pay self-employment tax through estimates too?

Yes. Estimated payments cover your total federal tax, which for sole proprietors and most partners includes self-employment tax for Social Security and Medicare. That is often why a first-year owner's estimates are larger than expected.

My S corporation pays me a salary with withholding. Do I still need estimates?

Possibly. Withholding on your salary may not cover the tax on your share of the company's profit, which passes through to your personal return. Many S corporation owners solve this by increasing their withholding rather than making separate estimated payments.

Can I apply my refund to next year's estimates?

Yes. You can apply all or part of an overpayment to the next year's first installment on both the federal and New York returns. It is treated as paid on the original due date of the return.

This article is general information for 2026, not tax or legal advice for your situation. Tax rules and figures change; confirm current amounts with the IRS, New York State, or your accountant before acting.

Related service: Business & Corporate Tax