Quarterly tax estimates are payments you make to the IRS, and to your state if it has an income tax, to cover tax on income that has no withholding attached. Your business profit passes through to your Individual Tax Return (ITR), so these are a personal tax obligation even though the income comes from your business.
This article applies to both LLC and S Corp members. Where the two tiers work differently, we call it out.
Collective calculates the number for you. You make the payment and record it. Below is how we arrive at the figure, and what keeps it accurate.
The quarterly calendar
| Quarter | Income period | Federal due date |
|---|---|---|
| Q1 | January 1 to March 31 | April 15 |
| Q2 | April 1 to May 31 | June 15 |
| Q3 | June 1 to August 31 | September 15 |
| Q4 | September 1 to December 31 | January 15 of the following year |
If a due date falls on a weekend or holiday, it moves to the next business day. State deadlines usually mirror the federal ones, with one common exception: California does not currently require a Q3 payment. State schedules change, so confirm the current one with your state tax agency.
Where to find your estimates
Go to Taxes, then Quarterly Estimates. The page is titled Quarterly payments and has two tabs.
- Estimated Taxes. Your personal quarterly estimate, split between federal and your state.
- Fees and Franchise Taxes. Entity-level taxes your business owes, such as the DC Corporate Franchise Tax or California business taxes. These are separate from your personal estimate, and both can be due at once.
Below both tabs is Past payments, a history of everything you have recorded.
How the estimate is calculated
Choosing a method
The first question in the estimate flow asks which of two approaches matters more to you this quarter. You will see it worded like this:
| "Keep my payments the same every quarter to avoid underpayment penalties" | "Don't pay more than my income projections but risk underpayment penalties" |
|---|---|
Known as the safe harbor method. It uses your prior year tax, so your four payments stay level and predictable.
Under current law, this generally protects you from underpayment penalties if you pay 100% of last year's total tax, or 110% if your prior year adjusted gross income was above the higher-income threshold. Check the current figure on IRS.gov. Best when this year looks broadly like last year. The trade-off is that you may overpay if your income has dropped. | Uses your actual numbers from this year instead of last year's return.
Targets what you are likely to owe rather than a penalty-safe floor.
Best when this year is materially different, for example a brand new S Corp, or when you have not filed last year's return yet. The trade-off is that you may underpay if your income rises late in the year. |
Both are IRS-approved. Which one suits you depends on your circumstances, and it is a decision only you or your tax advisor can make. You can switch between them whenever you re-run your estimate.
What goes into the number
Your estimate is built from your business income, plus any other income you tell us about, minus the tax you have already paid.
- Business income. We annualize your year-to-date profit, which means projecting a full year from what has happened so far. If you made $10,000 in profit in Q1, we project roughly $40,000 for the year and base your estimate on that projection rather than the $10,000 alone. For S Corp members, this works from your business net income, not from the distributions you actually took. For LLC members, it works from your Schedule C profit.
- Other household income. The flow asks whether you have income outside your business and, if so, walks through freelance work reported on a 1099, salary from another job reported on a W-2, and gains from investments you sold. Anything you enter is included in the calculation.
- Tax already paid. Withholding from a paycheck, plus any estimated payments you have recorded, reduce what is left to pay. The flow asks for the year-to-date withheld figure from your most recent pay stub.
- Your tax profile. Your state of residence, filing status and dependents affect your rate. These live under Settings on the Quarterly payments page rather than in the question flow, so update them there whenever something changes.
If you skip the outside income or withholding questions, the estimate is calculated without them. That is the most common reason an estimate looks higher or lower than expected. Collective is not liable for underpayment penalties or interest resulting from income earned outside your business that was not included in your estimate.
Seeing the math
Select See calculation breakdown at any point to see every input behind the figure. It shows:
- Your estimate total, split by jurisdiction
- Income, separated into business-related figures and each category of outside income
- Taxes paid, covering both recorded quarterly payments and other withholding
- The tax rates applied, including your marginal rate, effective rate and projected annual liability
If a number looks wrong, this is the fastest way to find which input is driving it.
Keeping your estimate accurate
The calculation is only as good as the information behind it. Three things keep it accurate:
- Keep your bookkeeping current. Your estimate depends on your revenue and expenses, so connect your business bank accounts, keep personal and business spending separate, and make sure all business expenses are recorded. If you are a few months behind, catching up will improve the estimate.
- Record payments as you make them. Nothing syncs automatically from the IRS or your state. Until you record a payment, the estimate does not know about it.
- Re-run the estimate when something changes. Select Refine estimate to walk the questions again. You can do this as often as you like, and the figure updates each time you finish.
It is worth re-running if your income is materially up or down, you have added a new income stream, your filing status or dependents have changed, you have moved states, or your income varies a lot month to month.
Paying and recording your estimate
Once you finish the questions and select Finalize my estimate, the page shows one card per jurisdiction with its own amount and due date.
- Pay at the tax authority. Each card has a direct link, such as Pay at IRS.gov or your state equivalent. Federal estimated payments use your personal Social Security number rather than your business EIN, because this is an individual tax. Collective never debits your account, so every payment originates with you.
- Record the payment. Come back and select Record payment. Enter the tax type, amount, pay date, payment quarter and tax year, then attach your confirmation under Payment Receipt.
- Check it cleared. That receipt upload is what marks the amount as paid. The progress bar on the card fills as payments are recorded.
Recording a payment for an entity-level tax? Set the tax type to Business. Choosing Federal or State instead credits your personal estimate rather than the business obligation.
If you record something incorrectly, open the payment in Past payments and edit it. Recording it a second time will double-count.
If your estimate looks wrong
- Open See calculation breakdown and check the income figures against what you expect.
- Check whether withholding and prior payments are showing. If either reads $0 and you have a job with withholding or have already made payments this year, those questions were skipped.
- Check Settings, then Tax profile, for your state of residence, filing status and dependents.
- Select Refine estimate and re-run with corrected answers.
An estimate of $0 may be correct. Payroll withholding plus payments you have already recorded can genuinely cover the quarter. Check the breakdown before assuming the figure is missing, and confirm it against your own numbers before skipping a payment.
Questions
If you have questions specific to your business, reach out to your Collective team. They can walk you through the tool and help you work out next steps.
The information contained in this article is provided for informational purposes only and should not be construed as legal, financial, or tax advice. It is not intended to be a substitute for obtaining legal, accounting, or other financial advice from an appropriate and/or licensed adviser, or for the purpose of avoiding U.S. Federal, state or local tax payments and penalties.