Estimating Tax Due for an Extension

An extension gives you more time to file, not more time to pay. Paying something by April 15 helps reduce penalties and interest.

This concise guide provides an overview of how to decide if you should make a payment by April 15th, and how much, even if your return will be extended.

Please note this is not personalized tax advice, and following these instructions may not result in complete payment of your tax liability. Even for a seasoned tax expert, estimating your final tax liability is challenging without a completed tax return that considers all factors.

Step 1 — Pull these two numbers from last year’s tax return

Find your prior-year Form 1040 and locate:

1. Total Tax (Form 1040 line labeled “Total tax”)

2. Total Payments (Form 1040 line labeled “Total payments”)

Also, check last year’s Balance Due or Refund amount.

Step 2 — Decide whether this year will be similar or different

Ask yourself: did any of the following change meaningfully from last year?

• Your income increased or decreased a lot (W-2, self-employment, K-1s)

• Your business had a much higher profit year

• You sold stock/crypto, had RSUs vest, or took large investment distributions

• You bought/sold real estate or had rental changes

• You added/lost a dependent

• You took retirement distributions or changed major contributions

• You had Marketplace health insurance (1095-A)

• You did not make estimated payments this year (or they were much lower)

In general, if nothing major changed, last year is a reasonable baseline. If something major changed, you should pay more conservatively (i.e., higher) to reduce the risk of underpayment.

Step 3 — Choose a payment method (pick ONE)

Option A: “Same-as-last-year” approach (simplest)

If this year looks similar to last year, pay approximately what you owed last year (or slightly more if income increased).

Option B: Safe-harbor approach (best for avoiding underpayment penalties)

To generally avoid underpayment penalties, aim for total payments (withholding + estimates + extension payment) equal to:

• 100% of last year’s Total Tax, or

• 110% of last year’s Total Tax if you were a higher-income taxpayer

If you’re not sure which applies, paying 110% is the conservative choice.

Option C: Online estimator (DIY calculator)

Use an online tax estimator to generate a rough balance due, then pay that amount (or a conservative amount above it). Calculators are provided by all the "big box" tax companies such as H&R Block and TurboTax.

Step 4 — Make the payment by April 15

Make your extension payment directly using official federal/state payment sites:

• IRS: Pay as an “Extension” payment (Form 4868) / “Estimated tax” payment. Use https://www.irs.gov/payments.

• State: Submit an extension/estimated payment through your state revenue website

Step 5 — Keep your confirmation

Save your payment confirmation (PDF or screenshot). You will need it later to ensure we apply your payment correctly when we prepare your return.

Notes

• If you cannot pay the full estimate, pay what you can by April 15. Paying something is always better than paying nothing.

• Once the return is filed, if a balance remains, you may be able to set up a payment plan with the IRS/state.