If you run a small business or earn self-employment income, your taxes work a bit differently than they do for W-2 employees. Instead of having your taxes withheld from a regular paycheck, the IRS expects you to pay as you go with estimated tax payments. This is where Form 1040-ES, Estimated Tax for Individuals, comes into play. Let’s explore what Form 1040-ES is and how it works.
What is Form 1040-ES?
Form 1040-ES, Estimated Tax for Individuals, is an IRS package that helps you calculate and pay federal estimated taxes during the year. The form includes:
- Estimated Tax Worksheets. These worksheets help you figure how much tax you may owe for the year. Aside from the general estimated tax worksheet, the form also includes worksheets for self-employment tax and deductions, as well as for filers of Form 1040-SS
- Payment vouchers. If you decide to pay by mail, the form includes a payment voucher for each quarterly due date (four)
- Instructions. Form 1040-ES includes instructions and a payment record section to track what you paid and when
Unlike Form 1040, Form 1040-ES isn’t your annual tax return, though it is used to pay taxes on your taxable income throughout the year. It works alongside Form 1040, which you file once a year to report income, claim deductions and credits, and settle up with the IRS. You also don’t file Form 1040-ES the way you file your annual Form 1040. You use Form 1040-ES to calculate what you owe and to send in estimated tax payments on time. Additionally, you can pay online through IRS Direct Pay or the Electronic Federal Tax Payment System (EFTPS) without mailing a voucher.
If you’re a small business owner, Form 1040-ES typically covers both your federal income tax and your self-employment tax (Social Security and Medicare). Your business income and expenses are generally reported on Schedule C, while Schedule SE is used to calculate self-employment tax. Both ultimately affect the tax reported on your Form 1040.
Who needs to make estimated tax payments?
So, who needs to make estimated tax payments? You may need to make quarterly estimated tax payments if you expect to owe a significant amount of federal tax and not enough is being withheld from other income. That’s common for small business owners in situations like these:
- Self-employment income from a sole proprietorship, freelance work, dividends, or independent contracting (reported on Schedule C)
- Side gig income with little or no tax withholding
- Business income from a partnership, S corporation, or other pass-through entity that isn’t fully covered by withholding
- Other untaxed income, such as significant investment, capital gains, or rental income (even if your main focus is your business)
In most cases, you need to make estimated tax payments if you expect to owe at least $1,000 after subtracting withholding and refundable credits, and you expect those amounts to be less than the smaller of:
- 90% of the tax shown on your 2026 return, or
- 100% of the tax shown on your 2025 return
If your business is new or your income changes during the year, recalculate your expected annual tax periodically. A significant increase in income may require you to begin making estimated payments or increase your remaining installments.
You may not need separate estimated payments if withholding from a day job (yours or your spouse’s) is sufficient to cover the required amount. You may also reduce your risk of a penalty by making sure your withholding and timely estimated payments satisfy one of the IRS safe-harbor rules.
Do I have to file Form 1040-ES?
This is one of the most common questions about Form 1040-ES, and the answer depends on what you mean by “file.”
You don’t file Form 1040-ES as a tax return. There’s no annual submission that replaces or accompanies Form 1040 in that sense. The IRS doesn’t review Form 1040-ES on its own, like how it processes your completed tax return.
You may still need to use Form 1040-ES or pay the same amount another way. If you owe estimated taxes, you’re required to pay them on time, whether you mail a 1040-ES payment voucher or pay electronically. Be mindful that skipping the form doesn’t skip the obligation.
You generally don’t need to make estimated tax payments if:
- You expect to owe less than $1,000 when you file your return
- Your income tax withholding equals or exceeds your expected tax for the year
- You were a U.S. citizen or resident alien for the entire prior year, your prior tax year covered 12 months and you had no tax liability (meaning your total tax was zero), or you weren’t required to file a return
You may avoid the underpayment penalty if your withholding plus timely estimated payments equal at least 90% of this year’s tax, or 100% of last year’s tax (110% if prior-year AGI exceeded $150,000 — $75,000 if married filing separately).
Even if you don’t mail Form 1040-ES, keep records of every payment. You’ll report the total on your annual Form 1040 when you file.
When are quarterly taxes due?
Quarterly tax payments for calendar-year taxpayers are due four times a year. Note that the IRS payment periods aren’t equal three-month quarters — the second period covers two months (April–May), and the fourth covers four months (Sep.–Dec.).
Here are the 2026 estimated tax due dates for income earned during the 2026 tax year:
| Payment | Payment period | Due date |
| 1st payment | Jan. 1 – March 31, 2026 | April 15, 2026 |
| 2nd payment | April 1 – May 31, 2026 | June 15, 2026 |
| 3rd payment | June 1 – Aug. 31, 2026 | Sep. 15, 2026 |
| 4th payment | Sep. 1 – Dec. 31, 2026 | Jan. 15, 2027 |
Note: You don’t have to make the Jan. 15, 2027, payment if you file your 2026 tax return by Feb. 1, 2027, and pay the entire balance due with your return. If a due date falls on a Saturday, Sunday, or legal holiday, the deadline moves to the next business day. If you haven’t paid your first or second quarterly installment yet, calculate what you owe as soon as possible and pay as much as you can before the Sep. 15, 2026, deadline. You may still owe an underpayment penalty for a missed or late installment, but paying as soon as possible can reduce the amount, as the penalty is generally calculated based on the number of days the underpayment remains unpaid. You can also recalculate remaining payments.
How Form 1040-ES connects to Form 1040
Think of Form 1040-ES and Form 1040 as two parts of the same year-long process:
- During the year: Form 1040-ES helps you pay estimated taxes in four installments.
- At tax time: Form 1040 reconciles everything, including your total tax owed vs. what you already paid.
At tax time, you report your estimated tax payments in the payments section of Form 1040. On the 2025 Form 1040, estimated payments appear on Line 26 and are included in total payments on Line 33. Check the final 2026 form and instructions for the applicable line numbers. If you paid more than you owe, you get a refund. If you paid less, you owe the difference.
As a small business owner, your annual return still includes business-specific forms like Schedule C (business income and expenses) and Schedule SE (self-employment tax). Form 1040-ES doesn’t replace those; it helps you stay current on the combined tax bill they’ll produce.
How to use the Form 1040-ES worksheet
The Estimated Tax Worksheet in Form 1040-ES walks you through a simplified version of an annual tax calculation. For small business owners, the basic steps look like this:
- Estimate your expected adjusted gross income (AGI) for the year, including net profit from your business.
- Subtract deductions (either the standard deduction or estimated itemized deductions).
- Figure your estimated tax, including income tax and self-employment tax.
- Subtract withholding and credits you expect to claim during the year.
- Divide the required annual payment into four installments if your income is earned evenly during the year. If your income varies significantly from period to period, consider the annualized income installment method rather than simply dividing the amount equally.
If your business income is seasonal or lumpy, which is common for retailers, landscapers, and project-based contractors, you may qualify for the annualized income installment method. This method lets you pay less in lower-income quarters and more in higher-income quarters. That calculation is more involved; the instructions for Form 1040-ES and IRS Publication 505 explain the details.
If you use the annualized method, you generally need to file Form 2210 and Schedule AI with your annual return, even when no penalty is due.
State estimated taxes
Form 1040-ES covers federal estimated taxes only. Many states that levy income tax also require quarterly estimated payments if you’ll owe enough when you file your state return. Rules, thresholds, and due dates vary by state and don’t always align exactly with the federal schedule.
If you operate in a state with income tax, check your state revenue department’s guidance alongside your federal Form 1040-ES planning. When you file with TaxAct®, you can prepare federal and state returns together, keeping your annual filing coordinated.
Penalties for missing quarterly payments
The IRS expects you to pay tax as you earn income. If you underpay estimated taxes or miss a required payment, you may owe an estimated tax underpayment penalty when you file.
You can often avoid the penalty if your withholding and timely estimated payments equal at least:
- 90% of the tax shown on this year’s return, or
- 100% of the tax shown on last year’s return, or 110% if your prior-year AGI was more than $150,000 — $75,000 if married filing separately.
That’s the federal safe harbor we mentioned earlier. Meeting it gives you flexibility if your business income is hard to predict. Even when you satisfy a safe harbor, review your income and payments periodically so you aren’t surprised by a large remaining balance at tax time.
How to pay with Form 1040-ES using TaxAct
TaxAct makes estimated taxes easier for small business owners in a few ways:
- Calculate payment vouchers: Our software can help you estimate quarterly amounts and print Form 1040-ES payment vouchers to mail with a check or money order.
- Schedule Electronic Funds Withdrawals: When you e-file, you may be able to schedule up to four estimated payments from your bank account for the upcoming tax year.
- Annual return integration: Enter the estimated payments you made during the year, and TaxAct will include them in the appropriate payments section of your Form 1040.
FAQs
The bottom line
Form 1040-ES is the tool small business owners use to stay on top of federal taxes throughout the year. You don’t file it like an annual return; instead, you use it to calculate and send estimated tax payments on a quarterly schedule. Pair Form 1040-ES with your annual Form 1040, keep up with quarterly due dates, and use TaxAct to simplify calculations and payments. With a little planning, you can help avoid a large tax bill and penalties when filing season arrives.
When you’re ready to file, use TaxAct to help you prepare your federal and state returns in one place so you can file with confidence.
This article is for informational purposes only and not legal or financial advice.
All TaxAct offers, products and services are subject to applicable terms and conditions.
Citations
Internal Revenue Service. “About Form 1040-ES, Estimated Tax for Individuals.” https://www.irs.gov/forms-pubs/about-form-1040-es. Accessed 29 July 2026.
Internal Revenue Service. Form 1040, U.S. Individual Income Tax Return. IRS, www.irs.gov/pub/irs-pdf/f1040.pdf. Accessed 5 Aug. 2026.
Internal Revenue Service. Form 1040-ES, Estimated Tax for Individuals. IRS, www.irs.gov/pub/irs-pdf/f1040es.pdf. Accessed 5 Aug. 2026.
Internal Revenue Service. Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts. IRS, www.irs.gov/pub/irs-pdf/f2210.pdf. Accessed 5 Aug. 2026.
Internal Revenue Service. IRS. www.irs.gov. Accessed 5 Aug. 2026.
Internal Revenue Service. “Direct Pay with Bank Account.” IRS, www.irs.gov/payments/direct-pay-with-bank-account. Accessed 5 Aug. 2026.
Internal Revenue Service. “EFTPS: The Electronic Federal Tax Payment System.” IRS, www.irs.gov/payments/eftps-the-electronic-federal-tax-payment-system. Accessed 5 Aug. 2026.
Internal Revenue Service. “Estimated Tax: Individuals — When to pay estimated tax.” https://www.irs.gov/faqs/estimated-tax/individuals/individuals-2. Accessed 29 July 2026.
Internal Revenue Service. Publication 505, Tax Withholding and Estimated Tax. IRS, www.irs.gov/pub/irs-pdf/p505.pdf. Accessed 5 Aug. 2026.
Internal Revenue Service. Schedule SE (Form 1040), Self-Employment Tax. IRS, www.irs.gov/pub/irs-pdf/f1040sse.pdf. Accessed 5 Aug. 2026.