Corporate Estimated Taxes: The Four Payment Dates

Who has to pay, and how much

The estimated-tax requirement applies to C corporations, not to S corporations or partnerships — those entities generally pass income through to owners, who handle their own estimated-tax obligations individually. A C corporation must make estimated payments if it expects its tax for the year, after credits, to be $500 or more. Below that threshold, no addition to tax applies even if nothing was paid during the year.

The required annual payment — the total a corporation needs to have paid across all four installments to avoid an underpayment charge — is, for most corporations, the smaller of two numbers: 100% of the tax shown on the current year’s return, or 100% of the tax shown on the prior year’s return. A corporation growing quickly usually ends up paying to the current-year number regardless, since the prior-year figure is only smaller when the corporation is flat or shrinking.

A corporation with no prior-year tax liability, or whose prior year was a short year or its first year of existence, cannot use the prior-year exception and pays to 100% of the current year instead. These edge cases are where a CPA’s installment worksheet earns its keep — the general rule is simple, but the exceptions are not always obvious from the outside.

The large-corporation exception

A "large corporation" — one with taxable income of $1 million or more in any one of the three tax years immediately before the current one — cannot use the prior-year safe harbor the way smaller corporations can. Its required annual payment is 100% of the current year’s actual tax for the second, third, and fourth installments.

There is one narrow carve-out: a large corporation may still base its first installment on 100% of the prior year’s tax. Any amount that reduction saves gets recaptured by adding it back into the second installment, so the relief is a timing shift within the year, not a permanent reduction. Because the threshold looks back across three years on a rolling basis, a corporation can trip it in a single unusually profitable year and then find itself locked into 100%-of-current-year payments the following year even if that year is leaner — the corporation’s CPA tracks the lookback and flags the change before an installment is underpaid on the wrong assumption.

Where estimated payments fit into the rest of the calendar

Estimated-tax installments sit alongside, not instead of, the corporation’s annual filing obligations: Form 1120 is still due the 15th day of the 4th month after the tax year ends, and any balance still owed after the four installments is settled — or refunded, if the corporation overpaid — on that return. A corporation that pays accurately through the year generally owes little extra at filing time; one that skipped installments faces both the balance due and the accumulated §6655 interest on top of it.

Computing an accurate installment, particularly the current-year estimate most growing corporations end up needing, depends on having reasonably current books partway through the year — not a final trial balance, but close enough that a CPA is not estimating off stale numbers. That is a bookkeeping-readiness question before it is a tax-calculation one: the corporation’s CPA determines what is owed and files whatever needs filing; CapEasy’s bookkeeping work keeps the ledger current enough to make that determination possible on schedule.