FreelanceWhat will a missed quarterly payment actually cost you?
Enter what you owed and what you paid. The penalty is worked out installment by installment at the rate the IRS published for each quarter, and every line of the math is shown.
Estimated underpayment penalty
$142.30
Charged on the Q3 and Q4 shortfalls, counted until Apr 15, 2027.
Estimated underpayment penalty $142.30.
What each installment had to be
Each installment needed $3,500, a quarter of 100% of your 2025 tax, the smaller of the two tests.
The IRS has not announced the underpayment rate for January to April 2027 yet. Lines marked projected use the latest announced rate, 7%, until it does, usually in November.
| What you had to pay | |
|---|---|
| Total 2026 tax | $18,000 |
| 90% of 2026 tax | $16,200 |
| 100% of 2025 tax | $14,000 |
| Required for the year, the smaller | $14,000 |
| Required each installment, a quarter | $3,500 |
| Withholding counted on each due date | $0 |
| Q1, due Apr 15, 2026 | |
| Paid on or before the due date | $3,500 |
| Short on this installment | $0 |
| Penalty on Q1 | $0.00 |
| Q2, due Jun 15, 2026 | |
| Paid on or before the due date | $3,500 |
| Short on this installment | $0 |
| Penalty on Q2 | $0.00 |
| Q3, due Sep 15, 2026 | |
| Paid on or before the due date | $0 |
| Short on this installment | $3,500 |
| $3,500 unpaid Sep 16 to Sep 30, 2026: 15 days at 7% | $10.07 |
| $3,500 unpaid Oct 1 to Dec 31, 2026: 92 days at 7% | $61.75 |
| $3,500 unpaid Jan 1 to Jan 15, 2027: 15 days at 7%, projected rate | $10.07 |
| Penalty on Q3 | $81.89 |
| Q4, due Jan 15, 2027 | |
| Paid on or before the due date | $3,500 |
| Used first to cover an earlier shortfall | $3,500 |
| Short on this installment | $3,500 |
| $3,500 unpaid Jan 16 to Apr 15, 2027: 90 days at 7%, projected rate | $60.41 |
| Penalty on Q4 | $60.41 |
| Total | |
| Estimated penalty for 2026 | $142.30 |
FreelanceCFO tracks what you owe from your real income and warns you before each deadline, so there is no shortfall to pay interest on.
Start freeQuestions answered.
How is the estimated tax penalty calculated?
It works like interest. For each installment you paid short, the IRS multiplies the amount short by the number of days it stayed unpaid, divides by 365, and applies the underpayment rate for each quarter those days fall in. It is simple interest, not compounded, and it stops on the day you pay or on April 15, 2027, whichever comes first. That is the method on Form 2210, and it is the math shown line by line above.
What is the IRS underpayment interest rate for 2026?
7% a year for January to March 2026, 6% for April to June, and 7% for July to September and for October to December. The IRS resets it every quarter at the federal short term rate plus 3 percentage points. The rate for January to April 2027 is announced around November 2026, so until then this calculator carries the latest announced rate forward and marks those lines as projected.
Why do I owe a penalty on Q4 when I paid Q4 on time?
Because a payment is applied to the oldest shortfall first. If you skipped September and paid in full in January, the January payment covers the September installment, late, and the January installment is then short. The penalty on September stops the day that payment arrives, but a new one starts on January. Form 2210 works this way on purpose, and it is why catching up early costs less than catching up late.
How do I avoid the penalty entirely?
Pay at least the safe harbor across the year in four on time installments: 90% of your 2026 tax, or 100% of your 2025 tax if that is smaller. The 100% becomes 110% if your 2025 adjusted gross income was over $150,000. You also owe no penalty if your 2026 tax after withholding is under $1,000, or if you owed no tax at all for 2025 and were a US citizen or resident for the whole year.
What if my income came in unevenly during the year?
Then the regular method can overstate your penalty, because it assumes a quarter of the year's tax was due at each deadline. Form 2210 Schedule AI, the annualized income installment method, bases each installment on what you had actually earned by then. If most of your income arrived late in the year, it can cut the penalty sharply. This calculator uses the regular method only.
Does withholding count as paid on time?
Yes, and generously. Unless you choose otherwise, Form 2210 treats federal income tax withheld from a paycheck as paid in four equal parts on the four due dates, whenever in the year it was actually withheld. So raising your W-2 withholding late in the year can cover a shortfall from the spring, which an estimated payment made in December cannot.
Can the IRS waive the penalty?
Sometimes. The IRS can waive it if the underpayment came from a casualty, a disaster, or another unusual circumstance where charging it would be unfair, or if you retired after age 62 or became disabled during the year or the year before and the shortfall had a reasonable cause. You ask for the waiver on Form 2210. A busy year or a forgotten deadline does not qualify.