Estimated taxes are one of those responsibilities that most business owners know exist, but very few feel confident handling. You may have a rough idea that you are supposed to pay quarterly, but the details often feel unclear. How much should you pay? When exactly is it due? What happens if you get it wrong?
For Fort Worth business owners, this issue comes up constantly. If you run a plumbing or HVAC company, a real estate or insurance practice, or any service-based business, you are often earning income without taxes automatically withheld. That puts the burden on you to stay ahead of the IRS throughout the year.
The good news is that estimated taxes are manageable once you understand how they work. This guide is meant to help you do exactly that. We will walk through this guide to estimated taxes, how to calculate payments for 2026, and how to avoid penalties that can quietly drain cash flow even when your business is doing well.
The federal tax system operates on a pay-as-you-go basis. The IRS expects taxes to be paid as income is earned, not all at once when you file your return. Employees meet this requirement through paycheck withholding. Business owners and independent professionals usually do not.
Estimated taxes are how the IRS closes that gap. Instead of withholding, you make quarterly payments toward your federal income tax and self-employment tax based on what you expect to earn for the year.
This applies to all small business owners in Fort Worth and anyone earning rental income, investment income, or side income without withholding.
As a general rule, if you expect to owe at least $1,000 in federal tax after withholding and credits when you file your return, the IRS expects you to make estimated payments.
This is where many business owners get tripped up. Even if you fully pay your tax bill by April, penalties can still apply if taxes were not paid evenly throughout the year.
Estimated taxes are paid in four installments, but they are not tied neatly to calendar quarters. Instead, each payment corresponds to when income is earned.
If a due date falls on a weekend or federal holiday, it is typically pushed to the next business day. Since dates can shift slightly from year to year, it is always worth confirming the deadlines rather than relying on habit.
Understanding what each payment covers also matters. For example, the June payment generally applies to income earned in April and May. This becomes especially important if your income is seasonal or uneven, which is common for trades and commission-based businesses.
For the 2026 tax year, the standard federal deadlines are:
The IRS provides Form 1040 ES, which includes worksheets designed to help estimate your total tax liability for the year. While the form itself can look intimidating, the concept is straightforward.
You start by estimating your total income for the year, subtracting expected deductions, and calculating the resulting tax. The key is to base this on real data whenever possible. Reviewing year-to-date bookkeeping, signed contracts, and known expenses leads to far better estimates than guessing or copying last year’s numbers.
If your income has increased, your tax payments should usually increase as well. Reusing outdated estimates is one of the most common causes of underpayment.
For many business owners, the self-employment tax is the piece that gets overlooked. In addition to income tax, self-employed individuals generally owe Social Security and Medicare taxes on their net income.
This tax alone can exceed 15% and is included in your quarterly estimated payments. Ignoring it often leads to estimates that feel reasonable but still fall short when the return is filed.
The IRS offers safe harbor rules that allow you to avoid underpayment penalties even if your estimate is not exact.
In most cases, you can avoid penalties if you pay either:
Higher income taxpayers may need to pay 110% of the prior year’s tax.
Safe harbor rules are especially helpful for businesses with uneven income. They provide a clear target and reduce the stress of constantly recalculating payments when revenue fluctuates.
Even well-run businesses make mistakes with estimated taxes. Most penalties do not come from ignoring taxes entirely, but from small missteps that compound over time.
One of the biggest misconceptions is that penalties only apply if you fail to pay by April. In reality, the IRS looks at whether taxes were paid throughout the year. Paying everything at filing time does not erase penalties for missed or underpaid quarters.
Inflation adjustments, income growth, payroll changes, and equipment purchases all affect your tax picture. Using last year’s estimates without revisiting the numbers often leads to underpayment.
Rental income, investment income, and side projects all count toward your tax liability. Many business owners calculate estimates based only on their main business and forget about the rest until filing season.
Trades and commission-based businesses often earn more during certain parts of the year. The IRS allows income annualization to match payments to when income is earned, but this requires planning and documentation. Without it, penalties can apply even in profitable years.
Estimated taxes become much easier when they are treated as part of regular cash management rather than an occasional obligation.
Many business owners find it helpful to move a percentage of each deposit into a separate tax savings account. This creates discipline and reduces the temptation to spend money that will eventually be owed to the IRS.
Up-to-date bookkeeping is not just about compliance. It allows you to spot changes in income and expenses early, which makes adjusting estimated payments far less painful.
A short planning conversation in the fall can prevent January surprises. Reviewing estimates before the final payment is due often eliminates penalties and improves cash flow going into the new year.
Estimated taxes should not exist in isolation. They are closely tied to broader decisions like how owners are paid, when equipment is purchased, and how retirement contributions are structured.
When these decisions are made without considering estimated taxes, the result is often overpayment, penalties, or unnecessary stress. When they are coordinated, estimated taxes become predictable and manageable.
Estimated taxes do not have to be stressful, but they do require attention. The businesses that struggle most are not the ones that owe tax. They are the ones who guess, delay, or assume last year’s approach will still work.
At Adam Traywick, CPA, we work with Fort Worth business owners to turn estimated taxes into a planning conversation rather than a penalty notice. Whether you run a plumbing company, an HVAC business, a real estate practice, or an insurance agency, the goal is the same: pay what you owe, protect your cash flow, and avoid surprises.
If you have not reviewed your estimated tax strategy for 2026 yet, now is a good time to start that conversation.
