Avoid Penalties and Keep More Cash: How to Nail Estimated Tax Payments

Hello and welcome back to another session of Visibility CFO, Tax and LEGAL. I’m Andrew Stubbs, and this is where we unpack real challenges our clients face—and share creative, actionable solutions that turn confusion into clarity.

Today, we’re diving into how  we generally avoid tax surprises. We’re talking about a SIMPLE, but SMART strategy that can save you money and help you avoid penalties and surprises.

Here’s the thing: if you earn all your income through W-2 wages, your employer withholds taxes for you - makes life real simple, but also makes it more difficult to tax plan. But if you’re a business owner, have a side hustle, or run an S-corp, chances are you’re earning income that isn’t being withheld. That’s where quarterly estimated tax payments come in—but they can be tricky to navigate.

At a basic level, if you’re making money outside of W-2 wages, you should be looking at these quarterly deadlines:

• April 15

• June 15

• September 15

• And January 15

Now, if you don’t calculate your estimated tax payments correctly, three things could happen that we want to mitigate:

1. You overpay—effectively giving the IRS an interest-free loan you could have used to grow your business.

2. You underpay—and face penalties that add up fast.

3. You meet the IRS "safe harbor" but still owe a huge tax bill because you had a better year than last year - creating a SURPRISE tax bill - a surprise no one wants

So how do you avoid these? …….. Well, FIRST THINGS FIRST - We start with avoiding any unnecessary penalties….in this case specifically,  underpayment penalties

To avoid underpayment penalties, the IRS gives you a safe harbor:
Pay at least 90% of your total tax due for the current year, or 100% of what you owed last year ... .There are a few variations based on the amount of income you earn, but we’ll keep things simple because tax laws can get complicated fast. This is a good frame of reference to start with. 

Keep in mind—this includes all taxes paid during the year, like W-2 withholdings and quarterly payments, not just what you pay in April.

But here’s the real insight: just meeting the safe harbor doesn’t protect you from a surprise balance due. That’s especially true in high-income years, after an equity event, or if your business has strong seasonality.

To avoid surprises, you need to know where you stand throughout the year.

As the IRS says: “Pay as you go, so you won’t owe.”

At Visibility, we help our clients analyze their reasonable compensation, review tax-converted financials monthly, and consider seasonal patterns that your business may have. Then we use a mix of withholdings and estimated payments to keep them penalty-free and in control of what they may owe - 

Because here’s the truth: what you measure, you can improve.

When you're clear on your tax position, you’re in a much better place to legally and ethically minimize your tax bill—with strategies like income shifting, expense timing, and smart planning.

So here’s your action step:
Check in on your estimated taxes—especially if this year is shaping up better than the last. Don’t let success lead to a tax headache.

Need help mapping it out? Click the link below to book a session with our team.

Let us help you stop guessing—and start seeing clearly.

AND REMEMBER, we’re not just Strategic CFOs and Attorneys at Visibility, we’re also strategic tax planning CFOs and Attorneys with an eye on minimizing tax all along the way.