Three tips to make estimated tax payments less annoying

Three tips to make estimated tax payments less annoying

Tip 1: Have the last digit correspond to the quarter you made the estimated payment for. For example, on October 9th, you might pay $4003 for 3rd quarter estimated payments. On April 4th (Q1 payment), you might pay $4001. That way, you can check quickly whether you’re on track without having to count the number of payments made. 

Tip 2: Make Q4 estimated payments by December 15th, not in the new year. This helps avoid the, “wait, which year was that for?” problem, especially in quickbooks. 

Tip 3: Pay the taxes by the quarterly due date, don’t wait. What you want to avoid is getting hammered by tax bills in April of next year. Suppose you owe taxes for 2026 due April 15th, and you also owe taxes for Q1 2027 at the same time. That’s a pretty common scenario that can strain your cash flow. 

Critics will argue that this approach means missing out on interest, or “giving the IRS an interest-free loan.” However, I think their concerns are overstated. 

People massively underestimate the time and attention that estimated payments consume, while grossly overestimating the amount of interest they earn by “optimizing” their cash in this way. 

When you don’t know how much of the cash in your account actually belongs to you, as opposed to the IRS, you have a hard time making all the other decisions in your life. “Can I afford this trip? Am I overspending my retirement income? Can I make this investment in my business?” 

That fog of uncertainty is expensive because it keeps you from moving forward with your life.