January 15 is not "after the holidays we figure out taxes."
For most calendar-year people who pay estimates, it is the fourth installment. You already had April, June, and September. This one covers the rest of the year you are still living in.
The tax code is built for business owners. Nobody withholds from your K-1 or your brand deal. Regular people are allowed to use the same installment calendar the wealthy use. You just have to know the safe harbor so you aren't guessing from the bank app.
Not knowing your numbers is driving without GPS. A Q4 payment pulled from "whatever is in checking" is the same trip.
How the safe harbor actually works
You generally avoid the underpayment penalty if you paid in enough, on time, via withholding and estimates. Two common federal paths:
- About 90% of this year's tax, or
- 100% of last year's tax (110% if last year's AGI was over $150,000, $75,000 married filing separately)
Withholding from a W-2 (yours or a spouse) counts. Estimates count. A giant payment in January can still be late for the earlier quarters. Timing matters. Annualized income is a third path if your profit showed up late. That's advisor math, not a tweet.
| Path | What you pay | Fits |
|---|---|---|
| 90% of current year | Harder if 2026 is a spike year | When this year is smaller than last |
| 100% / 110% of last year | Known number from the last 1040 | Spike years. You overpay now, true-up later |
| Annualized | Based on when income landed | Lumpy creators, one giant deal in November |
Takeaway: after a blow-up year, 110% of last year's tax is often the cheaper penalty strategy even if you write a bigger check. You get the extra back as a refund. The penalty is what you don't get back.
Example: Last year a $90K/month shop (revenue) showed $180K tax on the 1040. AGI was over $150K, so 110% is $198K that needs to be in via withholding and estimates by the installment dates. They paid $40K through September. January 15 is not "send $198K." It is the last slice plus a look at whether Q1-Q3 were already short. A creator who 5x'd in 2026 cannot hide behind last year's tiny 1040. 90% of this year may be the real number.
State estimates have their own calendars. PTET payments are not a substitute for federal 1040-ES unless your facts actually line up.
What Q4 is for
- Pull last year's total tax from the 1040. That's the 100/110% target
- Forecast this year's profit with books, not the bank
- Don't mix this with October 15. That date filed last year's personal return. January 15 funds this year
- S-corp salary withholding can cover a chunk if payroll is real
A tax plan is a workout. The safe harbor is the trainer counting reps. "We'll catch up in April" is how the penalty prints.
Who this is for
Anyone who pays estimates: Schedule C, K-1s, rentals with withholding gaps.
Under $400K, hit the safe harbor and keep life simple. Over $400K, a missed Q4 after a spike is real money. That's when taxes are one of your biggest expenses.
If you still don't have last year's 1040, that's a year-round planning problem, not a January problem.
The short version
- January 15 is the fourth federal estimate for most people.
- Safe harbor: 90% of this year or 100/110% of last year, plus timing.
- A spike year breaks "just copy last year" if last year was tiny.
- Withholding counts. A late lump does not fully fix early quarters.
- Know the number in October. Don't discover it on January 14.
FAQs
Is January 15 a federal holiday delay?
If it falls on a weekend or holiday, the IRS posts the next business day. Don't assume. Check the year's calendar.
What is the 110% rule?
If prior-year AGI is over $150,000, the prior-year safe harbor is generally 110% of last year's tax, not 100%.
Can I skip January 15 if I extend my 1040?
No. Estimates are not the filing extension. October 15 already happened for last year's return.
Does my S-corp salary cover estimates?
Withholding on a reasonable salary helps. Distributions do not withhold. That's why salary plus estimates is a pair.
What if I underpaid Q1 through Q3?
A big January payment may still leave underpayment on the early periods. Annualized or extra withholding on a W-2 can be cleaner. Don't wait.
Will I get penalized if I pay 110% and this year is smaller?
You may overpay and get a refund. That's the point of the harbor. The penalty is the expensive surprise.
References
- IRS — Estimated taxes
- IRS — Publication 505, Tax Withholding and Estimated Tax
- IRS — Form 1040-ES
- IRS — Underpayment of estimated tax
What to do next
If Q4 profit is already in the account and nothing is earmarked for January 15, that's the leak.
At CEOHAVEN, we help entrepreneurs and real estate investors with tax planning and tax preparation. You have a team that handles the calendar. We make sure you actually know your numbers before the installment.
Book a call. We'll look at last year's tax, this year's forecast, and which harbor you can actually hit.
It's not about how much you make. It's about how much you keep.