The fourth quarterly estimated tax payment covers income earned from September 1 through December 31, 2026. It is due January 15, 2027. Miss the deadline and the IRS charges an IRC Section 6654 underpayment penalty at the 2026 rate of 7%, calculated from the due date through the date of payment. The Q4 installment is also the last chance to use year-end moves to reduce what you owe. For the full 2026 estimated tax guide covering all four quarterly deadlines, the annualized income method, and the SE tax calculation, see our complete estimated tax payment guide.
Who Must Make a Q4 Payment?
You are required to make an estimated payment if you expect to owe at least $1,000 in federal income tax after withholding and credits, and your total 2026 payments have not yet reached a safe harbor floor. This applies to:
- Self-employed individuals, freelancers, and sole proprietors (Schedule C)
- Partners and S-corp shareholders receiving pass-through income with no withholding
- Investors with Q4 capital gains or large dividends
- Landlords with net rental income on Schedule E
- Retirees with pension or IRA distributions that are under-withheld
If you already paid enough through Q1 to Q3 to satisfy a safe harbor, your Q4 payment may be zero. Run the calculation before January 15.
How Much to Pay for Q4
By January 15, 2027, your cumulative 2026 payments (withholding plus all four installments) must satisfy at least one test:
Prior-year safe harbor: Pay 100% of your 2025 total tax (Form 1040, line 24). This rises to 110% if your 2025 AGI exceeded $150,000 (or $75,000 for married filing separately). Divide that amount by four, then subtract what you have already paid in Q1 through Q3. The difference is your Q4 installment.
Current-year test: Pay 90% of your actual 2026 tax liability. If you expect significant year-end deductions or a lower 2026 income than 2025, this method often produces a smaller Q4 payment.
Three Q4 Strategies
Use Prior-Year Safe Harbor for a Fixed, Known Amount
Multiply your 2025 Form 1040 line 24 tax by 1.00 (or 1.10 if 2025 AGI exceeded $150,000), then divide by four. That is your required quarterly installment. Subtract your Q1 through Q3 payments plus any withholding to get the Q4 balance due. Once paid, you are fully shielded from the underpayment penalty regardless of your final 2026 liability. This approach works well for anyone with stable or growing income who does not want to model year-end projections.
Reduce Q4 With Year-End Moves Before December 31
Several moves taken before December 31 directly reduce your Q4 liability under the current-year 90% test. Solo 401(k) employee deferrals must be elected by December 31, reducing net self-employment income by up to $24,500 ($32,500 if age 50 or older; $35,750 for ages 60 through 63). Harvesting capital losses in taxable accounts offsets realized gains dollar for dollar. Prepaying deductible business expenses before year-end, such as software subscriptions, supplies, and professional dues, shifts the deduction into 2026. Each dollar of reduction cuts both income tax and self-employment tax at 15.3%.
Skip January 15 by Filing Your Return Early
The IRS waives the Q4 installment entirely if you file your complete 2026 Form 1040 and pay the remaining tax balance by January 31, 2027. This converts two deadlines into one: no separate January 15 estimated payment, just an early return with full payment. It works best for taxpayers who receive W-2s and 1099s early in January, have no complex income items requiring additional research, and prefer a single year-end close with no mid-January estimated payment to track.
The Q4 Underpayment Penalty
If your total 2026 payments fall short of both safe harbor tests, the IRC Section 6654 penalty applies. The 2026 underpayment rate is 7% (IRC Section 6621(a)(2); Rev. Rul. 2025-22). It accrues daily from January 15, 2027 through the earlier of the date paid or April 15, 2027. For a $10,000 Q4 shortfall over three months, that is roughly $175 in penalty. The penalty is computed on Form 2210 and reported with your 2026 Form 1040.
Have questions about your Q4 estimated tax or year-end planning? Contact TS CPA for a free consultation. We respond within the same day.