September 15 Estimated Taxes: Don’t Just Pay the Same Amount
With your third estimated tax payment due September 15, now is a good time to make sure the amount you scheduled earlier this year still reflects what you may actually owe.
Before you automatically pay the same amount you paid last quarter, pause and ask:
Does this payment still reflect what I’m likely to owe?
Estimated tax payments are generally based on projections made earlier in the year. Since then, your income, expenses, investments, or business performance may have changed significantly.
If your income has increased…
A strong year is worth celebrating—but it can also create a larger tax obligation.
You may need to increase your estimated payment if you have:
Earned more business income than projected
Received a large bonus or additional consulting income
Sold investments, real estate, or another valuable asset
Experienced fewer deductions or higher profits than expected
Received significant income without sufficient tax withholding
Continuing to pay the original estimate could leave you with an unexpected tax bill—and possibly an underpayment penalty.
If your income has decreased…
You may not need to keep sending the same amount.
If your revenue or income is lower than projected, your expenses have increased, or you experienced a significant business loss, adjusting your payment could help preserve cash for your current priorities.
There is little value in unnecessarily straining your cash flow simply because an earlier projection no longer matches your reality.
September is a strategic checkpoint
With several months of actual financial activity now available, September is an ideal time to compare your year-to-date results with the assumptions used to calculate your original estimated payments.
A midyear tax review can help determine:
Whether your projected annual income has changed
Whether your remaining payments should be adjusted
Whether you are on track to satisfy applicable tax-payment requirements
Whether new deductions, credits, or planning opportunities may be available
Whether you should set aside additional cash before year-end
The goal is not simply to make a payment. The goal is to make an informed payment based on where you are now.
Let’s make sure your numbers still make sense
If your income or financial circumstances have changed substantially this year, contact our office before making your September 15 payment. We can review your current numbers and determine whether your estimate should be updated.
FAQ
Should I Pay Estimated Taxes?
If you are a business owner and expect to owe at least $1,000 in taxes after credits and withholdings, you are required to pay quarterly estimated taxes instead of a lump sum payment at tax time.
How Much Do I Pay Quarterly?
The minimum requirement is to pay at least 100% of your last year's tax liability through tax withholding on your payroll system or by making estimated tax payments on the IRS website or mailing a check.
We publish quarterly payment vouchers in your client portal. If your income is the same as last year, you can use the vouchers you have to make payments. If you have experienced an increase in income or other significant changes, please inform us so that we can assist you with updated tax payment calculations.
Can the IRS Waive My Penalties?
The IRS can waive the estimated tax penalty only in limited circumstances such as casualty or disaster, newly retired or disabled, first time owing a penalty, and other circumstances that they consider “reasonable cause.”
