Estimated Tax Strategy for the Final Stretch of the Year
Financial Horizons: Insights for Building Wealth and Securing Your Legacy
Estimated Tax Strategy for the Final Stretch of the Year
By Dr. Jose G. Cardenas | Chief Tax Strategist, The C & R Group, LLC
The September 15 estimated-tax deadline is behind us.
That means the next major checkpoint for many calendar-year taxpayers is:
January 15, 2027.
But waiting until January to think about January is poor strategy.
The better move is to use the next three and a half months to determine:
What income is still coming;
What profits Q4 may create;
What gains may still be realized;
How much tax has already been paid;
Whether withholding should change;
How much should be set aside for the January payment;
Which year-end decisions deserve review before December 31.
The IRS treats federal income tax as a pay-as-you-go system. Tax is generally paid during the year through withholding, estimated payments, or both. For 2026, the final general estimated-tax installment for calendar-year individuals covers the September 1 through December 31 period and is due January 15, 2027. (IRS)
That gives us today's central principle:
The final stretch of the year should not be about scrambling to find deductions. It should be about continuously updating the projection and deliberately managing the tax gap.
1. Start With Where You Stand Today
Before planning what happens next, identify your current position.
Record:
Federal withholding YTD
$________
Estimated payments made
Q1: $________
Q2: $________
Q3: $________
State tax paid
$________
Current tax reserve
$________
Then determine:
Projected federal tax
$________
Projected state tax
$________
Remaining projected gap
$________
That number becomes your starting point.
Not your checking-account balance.
Not what you paid last year.
The current projection.
2. September 15 Was a Checkpoint, Not a Reset
Some taxpayers think:
“I made the September payment, so I’m good until January.”
Maybe.
Maybe not.
The payment dealt with the current estimated-tax installment.
It did not freeze the tax year.
Between now and December 31, you could still receive:
More wages;
Bonuses;
business profit;
capital gains;
dividends;
interest;
rental income;
K-1 income;
retirement distributions.
The tax picture can still change substantially.
3. Project Q4 Income Now
Build a September-through-December forecast.
Remaining wages
$________
Expected bonus
$________
Business profit
$________
Capital gains
$________
Interest/dividends
$________
Rental income
$________
K-1 income
$________
Retirement income
$________
Other
$________
Then add that to your actual year-to-date income.
Now you have:
Projected full-year income
$________
That is the number the tax plan should follow.
4. Business Owners: Update Profit Monthly
For business owners, the final stretch should include monthly P&L reviews.
At the end of:
September
Update profit.
October
Update profit.
November
Update profit.
December
Confirm final results as quickly as practical.
If projected annual profit changes materially:
Update the tax projection.
Do not let the January payment remain based on a September estimate when November produced a major new contract.
5. Do Not Assume Four Equal Estimated Payments Always Fit Reality
Estimated taxes are often described as “quarterly,” but income does not always arrive evenly.
The IRS provides an annualized income installment method for taxpayers whose income varies during the year. It can calculate required installments based more closely on when income actually arose rather than treating earnings as though they were received evenly throughout the year. (IRS)
That may deserve review for:
Seasonal businesses;
contractors;
commission-based professionals;
investors with large gains late in the year;
taxpayers whose income increased sharply in Q3 or Q4.
Timing matters.
6. Update the January 15 Payment Estimate Now
Do not wait until January 14.
Estimate it today.
Current expected January payment
$________
Then calculate:
Months remaining to reserve
Approximately:
4
If expected payment:
$24,000
Monthly reserve target:
Approximately:
$6,000
Now the tax obligation becomes a planned cash-flow item.
7. Build the Reserve Before Spending the Cash
When income arrives:
Do not immediately classify the entire amount as:
available.
Suppose a consultant collects:
$40,000
and the projection indicates that:
$12,000
should be reserved for taxes.
Economically, the freely available amount is closer to:
$28,000
before other obligations.
The mistake is spending:
$40,000
and then looking for:
$12,000
later.
Reserve first.
Spend second.
8. Review Wage Withholding
Estimated payments are not the only tool.
Employees can review federal withholding and, when appropriate, submit an updated Form W-4. The IRS specifically recommends checking withholding when income or circumstances change because too little withholding can result in a tax bill or penalty. (IRS)
If your projection shows a shortfall:
Compare:
Additional estimated payment
with
Additional payroll withholding
or
Combination of both
The correct approach depends on the household.
9. More Remaining Paychecks Mean More Flexibility
Suppose you need another:
$10,000
paid before year-end.
With:
8 paychecks remaining
that could mean approximately:
$1,250 per paycheck.
Wait until only:
2 checks remain
and the same amount becomes:
$5,000 per check.
Same tax obligation.
Much different cash-flow impact.
This is why September planning is still valuable even after the September 15 deadline.
10. Revisit Bonuses
If a year-end bonus is expected:
Include it.
Expected gross bonus
$________
Expected withholding
$________
Expected net cash
$________
Then update the full household projection.
Do not assume withholding on a bonus automatically equals the final tax generated by the bonus.
11. Review Business Distributions
If you own a pass-through business:
Track:
Distributions YTD
$________
Planned distributions
$________
Before taking additional cash:
Confirm:
Tax reserve;
operating cash;
payroll;
debt;
vendor obligations;
basis where relevant.
The year-end distribution should come after the tax and cash-flow review.
12. Review Owner Compensation
S corporation shareholder-employees should review whether compensation remains reasonable based on actual services and current-year facts.
If January expected:
$120,000 profit
and current projection is:
$350,000
the overall compensation discussion may deserve another look.
Do not postpone every payroll question until December.
13. Review Retirement Contributions
Between now and year-end, review:
Traditional 401(k);
Roth 401(k);
TSP;
IRA eligibility;
business retirement plans.
Ask:
Are contributions on track for the goal we actually intended?
And separately:
What does the contribution do to the current-year projection?
Do not confuse those questions.
Retirement planning is a wealth decision first.
The tax effect is part of the analysis.
14. Review Traditional Versus Roth
Traditional and Roth contributions can affect current taxable income differently.
So if you say:
“I contributed $20,000 to retirement.”
that is incomplete for projection purposes.
Break it down:
Traditional
$________
Roth
$________
The tax model needs the correct classification.
15. Model Roth Conversions Before Executing Them
If a Roth conversion is being considered:
Run at least two scenarios.
Scenario A — No conversion
Projected federal tax:
$________
Scenario B — Proposed conversion
Conversion:
$________
Projected federal tax:
$________
Then review:
marginal bracket;
capital-gain interaction;
NIIT;
state tax;
Medicare effects where relevant;
cash available to pay the tax.
The conversion should be intentional.
16. Review Capital Gains Before Additional Sales
Pull a realized-gain report.
Track:
Short-term gains
$________
Long-term gains
$________
Realized losses
$________
Carryforward
$________
Then ask:
What additional sales are planned before December 31?
A major Q4 sale should enter the projection before the order is placed.
17. Review Tax Lots
If you own shares purchased at different prices:
Different lots may have:
Different basis;
different holding periods;
different tax consequences.
Before selling:
Know which shares are leaving.
Tax-lot selection can matter.
18. Review Capital Losses
If you own investments showing losses:
Review them.
Do not automatically sell.
Ask:
Does the asset still fit the portfolio?
Has the investment thesis changed?
Would another investment better fit the plan?
Could the loss offset gains?
Would wash-sale rules matter?
Tax planning should support investment strategy.
Not dictate it.
19. Review NIIT
Higher-income taxpayers with:
Capital gains;
dividends;
interest;
rental income;
other investment income
should review potential exposure to the:
3.8% Net Investment Income Tax.
That is especially important when Q4 contains:
large stock sales;
business income growth;
bonuses.
The interaction matters.
20. Review Rental Property Results
Update:
Rent collected
$________
Expenses
$________
Depreciation
$________
Projected rental income/loss
$________
If you plan to:
sell property;
convert property use;
complete major improvements;
include that in the year-end plan.
21. Review K-1 Estimates
If you own interests in:
partnerships;
S corporations;
ask for year-end estimates where possible.
You may not receive the actual K-1 until filing season.
But waiting for the final form is too late for 2026 planning.
An informed estimate is better than:
$0 because we do not know yet.
22. Review QBI
Business owners should update Qualified Business Income planning using current numbers.
Review:
projected QBI;
taxable income;
W-2 wages;
qualified property;
business type;
capital gains.
Do not simply assume:
20% of business profit.
The deduction can be more complicated.
23. Review Charitable Giving
If significant charitable contributions are planned:
Do not wait until December 30.
Review:
Cash gifts
$________
Appreciated securities
$________
Other property
$________
Tax treatment, documentation, processing time, and investment strategy should all be considered.
24. Review Planned Business Purchases
If the business already needs:
machinery;
vehicles;
technology;
equipment;
furniture;
model the purchase.
Ask:
Cost
$________
Cash down
$________
Financing
$________
Expected tax treatment
$________
Business benefit
________________
A deduction should strengthen a legitimate business decision.
It should not create one from nothing.
25. Do Not Buy Tax Deductions You Do Not Need
If you spend:
$100,000
only to obtain a deduction:
You did not “save $100,000 in taxes.”
You spent:
$100,000
to reduce taxable income.
Those are not the same thing.
The best year-end tax strategy may sometimes be:
Keep the cash and pay the tax.
That can be the stronger wealth decision.
26. Review Charitable and Capital-Gain Strategy Together
Suppose you plan to:
Sell appreciated stock;
give $25,000 to charity.
Before selling:
Review whether donating appreciated assets directly may fit your charitable and investment plan.
The sequence matters.
Once you sell:
That specific choice may disappear.
27. Review State Taxes
The federal projection is only half the picture for many taxpayers.
Update:
State taxable income
$________
State withholding
$________
Estimated payments
$________
Projected balance
$________
Especially if:
you moved;
worked remotely;
expanded business activity;
sold property in another state.
28. Review Multi-State Changes
Q4 is not the time to discover that your business created new filing obligations months earlier.
Review:
Remote employees;
physical presence;
client work locations;
property;
business registrations.
State issues can become more complicated as the business grows.
29. Review Tax Law Changes Before Relying on Old Assumptions
Use current 2026 tax rules.
The IRS’s 2026 Publication 505 is specifically written for current-year withholding and estimated-tax planning. (IRS)
Do not run a 2026 projection from:
2024 brackets;
2025 assumptions;
an old spreadsheet someone emailed you two years ago.
Tax strategy expires faster than milk sometimes.
30. Use a Low, Expected, and High Case
If Q4 is uncertain:
Do not force one exact number.
Build three.
LOW
Projected annual income:
$________
Projected tax:
$________
EXPECTED
Projected annual income:
$________
Projected tax:
$________
HIGH
Projected annual income:
$________
Projected tax:
$________
Now you can decide how conservative the tax reserve should be.
31. Give Major Assumptions a Confidence Level
For each projected item:
Known
Already occurred.
Highly likely
Contracted or scheduled.
Probable
Reasonable expectation.
Uncertain
Possible but not committed.
That prevents one speculative contract from distorting the entire projection.
32. Review the Projection After Every Major Transaction
Update immediately after:
Large bonus;
major contract;
stock sale;
business acquisition;
property sale;
retirement distribution;
Roth conversion.
Do not wait for the monthly review if something material changes.
The model should move when the facts move.
33. Build a Monthly Tax Routine
From now through year-end:
September
Update Q3 results.
October
Reproject after September close.
November
Reproject after October close.
December
Run final action review.
Early January
Confirm January estimated payment.
That creates discipline.
34. The January Payment Should Not Be a Surprise
The IRS lists January 15, 2027 as the general final 2026 estimated-tax due date for calendar-year individuals. (IRS)
By December, you should already have a strong estimate.
January should be:
execution.
Not:
discovery.
35. Know the January Filing Exception
Publication 505 states that if you file the 2026 Form 1040 or 1040-SR by January 31, 2027, and pay the remaining tax due, you generally do not have to make the January 15 estimated payment. That exception does not erase potential underpayment issues from earlier installments. (IRS)
So early filing can change the January mechanics.
It does not rewrite the previous year’s payment history.
36. Review Safe Harbor—Then Go Beyond It
The IRS general estimated-tax rule for many individuals looks at whether expected withholding and credits meet the smaller of:
90% of current-year tax; or
generally 100% of prior-year tax,
subject to special rules for certain taxpayers. (IRS)
That is useful.
But your planning should also answer:
What will I actually owe?
Safe harbor protects against one problem.
Funding the actual liability solves another.
37. Do Not Forget the $1,000 Threshold
In most cases, estimated tax generally applies if you expect to owe at least $1,000 after withholding and tax credits and your expected payments fall below the applicable required-payment threshold. (IRS)
Again:
That is a payment-rule threshold.
It does not mean smaller tax balances are irrelevant.
38. Complex-Income Households Need One Projection
Suppose the household has:
Wages
$220,000
Business profit
$60,000
Capital gains
$45,000
Dividends
$10,000
Rental income
$15,000
Total major income:
Approximately:
$350,000
Do not create five disconnected tax plans.
One return.
One projection.
39. Military Retirees Need the Same Coordination
A military retiree might have:
Military retired pay;
civilian wages;
spouse income;
VA benefits;
business income;
investments.
Those income sources can have different tax characteristics.
But they still belong in:
one coordinated household plan.
This will be particularly important in this week’s military companion.
40. Create a Tax Decision Log
This is something I recommend for sophisticated taxpayers.
Keep a simple list.
Date
________
Decision
________________
Estimated tax effect
$________
Cash-flow effect
$________
Why we made the decision
________________
Examples:
Roth conversion;
stock sale;
large equipment purchase;
owner distribution;
charitable gift.
Now year-end planning becomes documented rather than improvised.
Illustrative Case Study: The Final Stretch Changes the Plan
Consider Robert and Amanda.
Married filing jointly.
At September 15:
Wages
$200,000 projected
Business profit
$90,000 projected
Investment income
$10,000
Their September payment was based on those numbers.
Everything looked manageable.
Then Q4 changed.
October
Robert’s business wins a large contract.
Additional projected profit:
$60,000
November
Amanda receives a bonus:
$30,000
December
They plan to sell investments with:
$40,000 long-term gain.
Now the household has an additional:
$130,000
of projected income compared with the September model.
If they never update the projection:
January could be ugly.
Step 1 — Update the Household Income
Original projected major income:
$300,000
Updated:
Approximately:
$430,000
before adjustments.
That is a different tax year.
Step 2 — Review the Tax Already Paid
Federal withholding:
$32,000
Estimated payments through September:
$18,000
Total:
$50,000
Now calculate updated projected liability.
Step 3 — Estimate the January Payment
Updated January payment:
$________
Now they know the approximate target months in advance.
Step 4 — Build the Reserve
Suppose the projection shows:
Additional cash needed:
$24,000
They have three months remaining.
Approximate reserve:
$8,000 per month.
The obligation becomes manageable.
Step 5 — Review Withholding
Amanda still has several paychecks and a bonus.
Additional withholding may be one possible tool.
Now the family can compare:
bonus withholding;
regular payroll withholding;
estimated payment.
Step 6 — Review the Investment Sale
Before realizing the $40,000 gain:
They review:
basis;
holding period;
losses;
tax lots;
NIIT.
They may still sell.
But now they understand the projected tax consequence.
Step 7 — Review Retirement
Robert’s stronger business profit may create additional retirement-planning opportunities.
They model them.
No panic.
No “we need a write-off.”
A deliberate decision.
The Result
Same successful year.
But instead of discovering a major liability in April:
They identified it in Q4.
Funded it.
Adjusted where appropriate.
And entered January prepared.
That is estimated-tax strategy.
The Final-Stretch Tax Dashboard
ACTUAL THROUGH AUGUST
Income:
$________
Tax paid:
$________
SEPTEMBER PAYMENT
Federal:
$________
State:
$________
Q4 FORECAST
Wages:
$________
Bonus:
$________
Business profit:
$________
Capital gains:
$________
Investment income:
$________
Other:
$________
FULL-YEAR TAX
Federal:
$________
State:
$________
PAYMENTS
Projected withholding:
$________
Estimated payments:
$________
GAP
Projected additional liability:
$________
JANUARY
Projected payment:
$________
RESERVE
Current:
$________
Target:
$________
Gap:
$________
Update monthly.
Final-Stretch Tax Checklist
INCOME
Wages projected.
Bonuses included.
Business profit updated.
Capital gains updated.
Dividends included.
Rental income included.
K-1 income estimated.
Retirement distributions included.
PAYMENTS
September payment recorded.
Federal withholding updated.
State withholding updated.
January payment estimated.
Safe harbor reviewed.
STRATEGY
Tax reserve funded.
Retirement reviewed.
Roth conversion modeled.
Capital gains/losses reviewed.
QBI reviewed.
Charitable giving reviewed.
Business purchases reviewed.
CASH FLOW
Q4 cash needs projected.
Tax cash separated.
Business operating cash protected.
Q1 2027 reserve reviewed.
Q4 Tax Strategy Scorecard
Give yourself one point for every YES.
September payment recorded.
Full-year income updated.
Q4 business profit projected.
Bonuses included.
Investments included.
Withholding updated.
State taxes projected.
January payment estimated.
Tax reserve funded.
Retirement reviewed.
QBI reviewed.
Capital-loss opportunities reviewed.
Major purchases reviewed.
Q1 cash protected.
Next projection review scheduled.
13–15 YES
GREEN — Final Stretch Under Control
8–12 YES
YELLOW — Good Start, Important Work Remains
0–7 YES
RED — January Is Being Allowed to Sneak Up on You
Fix the visibility first.
AI-Search Quick Answers
When is the next estimated-tax payment due after September 15, 2026?
For calendar-year individuals, the general next installment covers September 1 through December 31 and is due January 15, 2027. (IRS)
Is federal income tax pay-as-you-go?
Yes. The IRS states that federal income tax generally must be paid as income is earned or received, through withholding, estimated payments, or both. (IRS)
Who may need estimated payments?
Self-employed taxpayers commonly use them, but estimated tax may also be necessary for people receiving income such as interest, dividends, capital gains, rents, and other income not sufficiently covered by withholding. (IRS)
What if income is uneven during the year?
The IRS annualized income installment method may allow estimated payments to reflect when income was actually received rather than assuming income was earned evenly throughout the year. (IRS)
Can employees adjust withholding late in the year?
Yes. Employees can review withholding and submit an updated Form W-4 when appropriate. The IRS encourages withholding checks after income or life changes. (IRS)
What is the general 2026 estimated-tax rule?
In most cases, estimated tax is generally required when expected tax due after withholding and credits is at least $1,000 and expected payments are below the smaller of 90% of current-year tax or generally 100% of prior-year tax, subject to special rules. (IRS)
Can early filing eliminate the January 15 installment?
Publication 505 states that if a taxpayer files the 2026 Form 1040 or 1040-SR by January 31, 2027, and pays the remaining tax due, the January 15 installment generally is not required. (IRS)
30 Questions to Answer Before the Final Stretch Gets Away From You
What is actual YTD income?
What income remains?
Is a bonus expected?
What is current business profit?
What Q4 business profit is projected?
What capital gains have occurred?
What additional sales are planned?
What losses exist?
What dividends and interest are expected?
What rental income exists?
What K-1 income is expected?
What retirement distributions remain?
Is a Roth conversion planned?
What federal tax has been withheld?
What state tax has been withheld?
What estimated payments have been made?
Is the September payment recorded?
What is projected federal liability?
What is projected state liability?
What is the remaining tax gap?
Does safe harbor apply?
Is income uneven enough to review annualization?
What is the estimated January payment?
How much is already reserved?
Should payroll withholding change?
Are retirement contributions on track?
Does QBI need review?
Are major business purchases planned?
Is Q1 2027 operating cash protected?
If Q4 turns out better than expected, will my tax plan automatically adapt—or will I discover the change in January?
That final question is the real final-stretch test.
What to Do Next
Create a Q4 Estimated Tax Mission Plan.
STEP 1 — UPDATE
Actual YTD income:
$________
STEP 2 — FORECAST
Q4 income:
$________
STEP 3 — PROJECT
Full-year federal tax:
$________
Full-year state tax:
$________
STEP 4 — COMPARE
Projected tax payments:
$________
STEP 5 — FIND THE GAP
Remaining liability:
$________
STEP 6 — RESERVE
Current reserve:
$________
Additional amount needed:
$________
STEP 7 — PLAN JANUARY
Projected January 15 payment:
$________
STEP 8 — REVIEW
Next projection date:
________________
Put that date on the calendar.
Final Thought
The September 15 deadline is behind us.
Good.
Now the year gets interesting.
The final stretch can produce:
Bonuses.
Business growth.
Capital gains.
Distributions.
Retirement decisions.
Charitable gifts.
Major purchases.
Any of those can change the tax picture.
That is why estimated-tax strategy is not:
“Make four payments and hope.”
It is:
“Continuously compare the taxes being created with the taxes being paid.”
When the numbers change:
Update.
When income grows:
Recalculate.
When a gain occurs:
Include it.
When cash arrives:
Reserve the tax.
When a strategy is considered:
Model it first.
Because the next major estimated-tax date is January 15.
But the best time to plan for January is:
September.
Not January 14.
Use the next three and a half months.
Project.
Reserve.
Adjust.
Review.
Finish strong.
That is how estimated-tax strategy should work during the final stretch of the year.
Book Your Q4 Tax Strategy Consultation
If your income, business profit, investments, withholding, or estimated payments are changing as you enter Q4, now is the time to update the projection and begin planning for January 15.
We can review:
Year-to-date income;
Q4 business profit;
Bonuses;
capital gains and losses;
withholding;
estimated payments;
annualized-income considerations;
tax reserves;
QBI;
Roth conversions;
retirement contributions;
charitable planning;
state taxes;
January estimated-payment strategy.
Booking link:
https://api.leadconnectorhq.com/widget/booking/T4UHUjCijCtIB3rwoTDI
Phone: 580-699-1591
Booking your appointment now:
ABOUT THE AUTHOR
Dr. Jose G. Cardenas is a retired U.S. Army Finance Officer and the Chief Tax Strategist at The C & R Group, LLC. With a Doctorate in Business Administration and over 20 years of experience in tax planning and financial strategy, Dr. Cardenas helps individuals and business owners legally reduce taxes, strengthen cash flow, and build lasting wealth and legacy. Learn more at www.thecrgroupllc.com
DISCLOSURE
This article is for educational and informational purposes only and is not intended to serve as personalized legal, tax, or investment advice. Tax laws and regulations change over time and may vary by jurisdiction. You should consult with a qualified tax professional regarding your specific circumstances before implementing any strategy discussed here. Dr. Jose G. Cardenas, DBA, provides tax advisory services through The C & R Group, LLC. Insurance and investment strategies may be offered through his role as a licensed financial professional affiliated with Experior Financial Group.
