# Corporate estimated tax: four installments a year

> Four installments a year once the tax reaches $500, each a quarter of the required annual payment, worked for Northwind's first full year.

Source: https://lopifi.com/learn/corporate-estimated-tax-payments
Part of: Lopifi — US GAAP books on autopilot, checked by a CPA (https://lopifi.com)

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**Does my C corp have to pay quarterly estimated taxes, and how much?** Four installments a year once the tax reaches $500, each a quarter of the required annual payment, worked for Northwind's first full year.

A corporation doesn't wait for April to pay its income tax. Once it expects $500 or more for the year, it pays [estimated tax](https://lopifi.com/md/glossary/corporate-estimated-tax) in four installments, on the 15th day of the 4th, 6th, 9th and 12th months of its tax year — April, June, September and December for a calendar year — each a quarter of the required annual payment, through EFTPS. A date that lands on a weekend or holiday moves to the next business day.

> “Installment payments are due by the 15th day of the 4th, 6th, 9th, and 12th months of the corporation's tax year.”

— [IRS Pub. 542 (Rev. 01/2024), Estimated Tax](https://www.irs.gov/publications/p542), Corporations — estimated tax, EFTPS, Form 2220, and Form 1120-W now historical

> “There shall be 4 required installments for each taxable year.”

— [26 U.S.C. §6655(c)–(f)](https://www.law.cornell.edu/uscode/text/26/6655), Failure by corporation to pay estimated income tax — installments, the required annual payment, the $500 exception

*[Figure: quarterly estimates]*

Northwind's 2027 installments on the illustrative $4,403.45 of tax from the Form 1120 lesson.

## The required annual payment

Each installment is 25% of the *required annual payment*: the lesser of 100% of this year's tax and 100% of last year's. Last year only counts if it was a full 12-month year and its return showed a tax liability, and never for a large corporation (one with $1 million of taxable income in any of the three years before). A company in its first profitable year usually can't use it.

**100% of last year's tax**
- Pro: Known in advance — no forecasting.
- Pro: Pay it and there's no underpayment penalty, however this year turns out.
- Con: Not available after a short year, a zero-tax year, or to a large corporation.
- Best for: A company whose tax is rising and whose last year was a full year with a liability.

**100% of this year's tax**
- Pro: Always available.
- Pro: Matches the tax the year actually owes.
- Con: Needs a forecast of this year's taxable income, revised as the year goes.
- Best for: Everyone else, including every company's first profitable year.

The two bases for the required annual payment.

**Northwind — A short first year, so this year's tax.** Northwind's 2026 ran from September 1, 2026 to December 31: a short year. So for 2027 the prior-year basis is out, and the required annual payment is 100% of this year's tax, $4,403.45. A quarter of it is due on each date below; the fourth installment absorbs the rounding so the four add back to the cent.

| Installment | Due | Amount |
| --- | --- | --- |
| 1 of 4 | April 15, 2027 | 1,100.86 |
| 2 of 4 | June 15, 2027 | 1,100.86 |
| 3 of 4 | September 15, 2027 | 1,100.86 |
| 4 of 4 | December 15, 2027 | 1,100.87 |
| Required annual payment |  | 4,403.45 |

2027 installments.

> **The short first year.** Northwind's own first year has installment rules of its own for a year that starts on a date other than January 1 (§6655(i), fiscal years and short years). That one is the preparer's call. The pattern above is every full calendar year after it.

**Wrong:** File Form 1120-W with the IRS each quarter.

**Right:** Work the installments from Pub. 542's worksheet, pay through EFTPS, and use Form 2220 if one was late or short.

Form 1120-W, the estimated tax worksheet, is historical: its 2022 revision was its last. Publication 542 has the worksheet now, and Form 2220 figures any underpayment penalty.

> **Expect $500 or more of tax, and the tax is paid in four quarters during the year, not in April after it.**

## Where this lesson's rules come from

- [IRS Pub. 542 (Rev. 01/2024), Estimated Tax](https://www.irs.gov/publications/p542) — Corporations — estimated tax, EFTPS, Form 2220, and Form 1120-W now historical (irs)
- [26 U.S.C. §6655(c)–(f)](https://www.law.cornell.edu/uscode/text/26/6655) — Failure by corporation to pay estimated income tax — installments, the required annual payment, the $500 exception (statute)
- [Form 2220](https://www.irs.gov/pub/irs-pdf/f2220.pdf) (PDF) — Underpayment of Estimated Tax by Corporations (PDF) (form)
- [26 U.S.C. §7503](https://www.law.cornell.edu/uscode/text/26/7503) — Time for performance of acts where last day falls on Saturday, Sunday, or legal holiday (statute)

## Read further

- https://lopifi.com/md/startups/startup-tax-deadlines-by-month
- https://lopifi.com/md/startups/startup-compliance-calendar
- https://lopifi.com/md/accounting/form-1120

- **Track:** [Compliance & tax](https://lopifi.com/md/learn/compliance)
- **Lesson:** Lesson 4 of 10 — 8 min
- **Terms taught:** [Corporate estimated tax](https://lopifi.com/md/glossary/corporate-estimated-tax), [Income tax expense](https://lopifi.com/md/glossary/income-tax-expense), [Prepaid expense](https://lopifi.com/md/glossary/prepaid-expense)
- **Previous:** [Form 1120: the federal return, the extension and the 21% rate, Compliance · Lesson 3](https://lopifi.com/md/learn/form-1120-corporate-income-tax)
- **Next:** [State income and franchise taxes: one idea, many names, Compliance · Lesson 5](https://lopifi.com/md/learn/state-income-and-franchise-taxes)
- **The course:** https://lopifi.com/md/learn