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Level 1
May 23, 2026
Question

I am interested in full service estimated taxes, but would like to speak to someone to explain my situation and see if this is the best choice.

  • May 23, 2026
  • 2 replies
  • 723 views
W-2, dividends, long term capital gains, staying under certain tax brackets

2 replies

fanfare
Level 15
May 23, 2026

If your periodic withholding and estimates in [this year] are at least 100% / 4 = 25% ( 110% / 4 for certain high income taxpayers) of your [last year's] tax, there will be no penalty on your [this year] tax return, regardless of any jump in income.
you are protected from a sudden capital gain or Roth conversion at year end.
you know your prior year's tax when you file by April 15, which is also the first estimated tax payment due date.

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IRS requires you to establish your Required Annual Payment for the year and pay as you go.

You can base your estimate on prior year's tax , or 90% of this year's tax, whichever is smaller.
each period your withholding and estimated tax paid must be at least 25% of the estimate, even if your income is uneven. [Otherwise, you will be penalized.] this is the simplified method, default.
Payments above 25% are carried into the next period.
if your estimate is based on this year's tax and turns out to be wrong you may be penalized.
you can compensate by overestimating.
if your estimate is based on prior year's tax, you know that when you file by April 15, which is also the first estimated tax payment due date. How convenient.

OR

If you can arrange to meet the "Required Annual Payment"
entirely through withholding , the timing does not matter. ES payments are not needed. There will be no penalty.

This is the default basic rule.
Otherwise, see Form 2210 Schedule AI for how to reduce your penalty.

 

@RickBates 

baldietax
Level 12
May 23, 2026

is "full service estimated taxes" a thing?

 

either way calculate your safe harbor and estimate for 2026 yourself as indicated by @fanfare see also instructions for Form 2210 or Form 1040-ES

 

you can use calculators like this to keep track of 2026 estimate

https://www.dinkytown.net/java/1040-tax-calculator.html

 

re "best choice" if you are over the safe harbor you should either increase withholding or pay estimated taxes.  Withholding is always considered timely so you can increase it later in the year but the later you do it the less time you have to make up any gap.

 

Paying fixed quarterly ES based on prior year tax is the simplest as it's known amount (assuming withholding is known), the only downside is it could be an overpayment if 90% of 2026 tax is less than 100/110% of 2025 tax especially if you fall into the 110% requirement for higher income.  If you anticipate any large cap gains or Roth conversion later in the year then paying ES based on prior year isolates you from those timing issues otherwise you may have to file Annualized Income method which can be a lot of extra work.

 

If you did not pay Q1 ES yet you should do so ASAP to stop the penalty from Q1 accruing then pick up Q2 ES by the June deadline.