The January 15 Estimated Payment, and the Rule That Lets You Skip It

The fourth and final estimated payment for 2026 is due January 15, 2027. Most people who owe it do not know there is a documented way out of it, printed on the form itself.

Form 1040-ES carries an asterisk next to that date, and the footnote reads: “You don’t have to make the payment due January 15, 2027, if you file your 2026 tax return by February 1, 2027, and pay the entire balance due with your return.” (IRS Form 1040-ES (2026)).

That is not a loophole or an aggressive position. It is the instruction. If your books are closed and your return can be filed in January, the fourth payment collapses into the return and you make one payment instead of two.

Key Takeaways

• The fourth 2026 estimated payment is due January 15, 2027.
• You can skip it if you file the 2026 return by February 1, 2027 and pay the whole balance with it — stated on Form 1040-ES.
• The safe harbor is the smaller of 90% of this year’s tax or 100% of last year’s, so you never have to forecast perfectly.
• That becomes 110% of last year’s tax if your 2025 AGI was over $150,000 ($75,000 if married filing separately for 2026).
• No penalty applies at all if you owe less than $1,000 after withholding and credits.

The safe harbor is the part worth understanding

The common anxiety about estimated tax is that you have to predict the year correctly. You do not. There are two routes, and you only have to clear one.

The IRS states that a taxpayer generally avoids the penalty by paying at least 90% of the tax for the current year, or 100% of the tax shown on the prior year’s return, whichever is smaller (IRS, Estimated taxes, retrieved 2026-09-29).

The prior-year route is the useful one, because last year’s number is already known. You are not forecasting anything — you are paying against a figure printed on a return you already filed.

There is one adjustment. Form 1040-ES states that if your adjusted gross income for 2025 was more than $150,000 — or $75,000 if your 2026 filing status is married filing separately — you substitute 110% for 100% in the prior-year test. The farming and fishing exception aside, that is the whole of it.

Below all of it sits a floor: there is generally no penalty if you owe less than $1,000 after subtracting withholding and credits. A small side business that produced a modest profit may not trigger the rules at all.

Why the February 1 route is worth planning for

Two things make the skip-it route more attractive than it sounds.

The first is that it removes a payment from the middle of your slowest cash month. January is when a restaurant has just paid for December and has not yet earned February. Moving one payment out of the 15th and into a return filed two weeks later is a real cash-flow difference, not a technicality.

The second is that February 1, 2027 is already a date on your calendar for a different reason. Form 1099-NEC for 2026 is due January 31, which falls on a Sunday, so it moves to Monday, February 1, 2027. If you are closing the books and preparing contractor forms for that date anyway, filing the return in the same push is a smaller step than it looks.

The condition is absolute, though. You must file and pay the entire balance. A return filed on time with a partial payment does not qualify, and you are then late on a January 15 payment you chose not to make.

What this means for the books

The whole route depends on one thing: being able to close 2026 quickly enough to file in January.

That is a bookkeeping question rather than a tax question. A business whose accounts are reconciled monthly can produce a December close in the first half of January. A business that has not reconciled since the summer cannot, and will be taking the January 15 payment whether it wants to or not — then filing in March or April with the figures still unsettled.

Which is the honest version of the argument for keeping books current: it is not tidiness, it is optionality. The business with closed books gets to choose between two payment routes. The business without them has one.

If your accounts are behind, catch-up and clean-up is the thing that puts the choice back on the table, and it takes longer in December than in October.

How this was checked

The due dates, the February 1 exception and the 110% threshold are quoted from IRS Form 1040-ES (2026), the form itself rather than a summary of it. The 90% and 100% safe harbor figures and the $1,000 floor come from the IRS estimated taxes guidance page.

Massachusetts has its own estimated payment rules and its own schedule, which this article does not cover. Do not assume the federal dates carry across.

Green Books Inc. is a bookkeeping practice — Certified Bookkeeper (CPB), IRS Authorized e-File Agent, and Notary Public. This is general information about published rules, not tax advice. Whether the safe harbor applies to you, and which route is smaller, depends on your own return.

Frequently asked questions

If I skip the January payment and file late, what happens?

You are treated as having missed the January 15 payment, and the underpayment penalty runs on it. The exception is conditional on filing by February 1 and paying the full balance — missing either half of that means the original due date applies.

Is the safe harbor based on tax owed or tax paid?

On tax paid in, through withholding and estimated payments combined. Withholding counts, which is why someone with a W-2 job and a side business can sometimes clear the whole safe harbor by adjusting their W-4 rather than making estimated payments at all.

My income was much lower in 2026 than 2025. Do I still owe 100% of last year?

No — you pay the smaller of the two tests. If 90% of your actual 2026 tax is less than 100% of your 2025 tax, the 90% figure is your number. The prior-year route is a ceiling you can use, not a floor you are stuck with.

Does any of this apply to my S corporation?

The corporation has its own rules; this article is about the individual estimated payments that owners typically make. Pass-through income lands on your personal return, so the two interact — but they are not the same filing and not the same deadline.

The date to actually diary

Put February 1, 2027 in the calendar rather than January 15. If you can hit it, the earlier date stops mattering. If you cannot, you will know in early January with time to make the payment.

If you want the books in a state where filing in January is realistic, that work starts now rather than in December — book a consultation and we can look at what closing 2026 on time would take.