What happens if I miss an estimated tax payment?

The underpayment penalty accrues like interest from the missed due date, at a rate the IRS adjusts quarterly. It is computed quarter by quarter, so catching up quickly limits the damage — but paying everything in April doesn't cure earlier misses.

Are estimated taxes calculated on gross or net commissions?

Net commissions after business expenses — but the estimate must cover both income tax and self-employment or payroll tax, so the set-aside percentage is often higher than brokers expect.

Can I pay all my tax when I file in April instead?

You can, but each quarter's shortfall accrues its own underpayment penalty from its own due date, so for meaningful commission income this habit gets expensive.

How do I make federal estimated tax payments?

Through IRS Direct Pay or EFTPS, or by check with Form 1040-ES vouchers. Most states offer a similar online portal for state estimates.

Answer Library · CRE Broker Tax

How do quarterly estimated taxes work on commission income?

Short Answer

1099 commissions arrive with no tax withheld, so the IRS expects you to pay as you go: four estimated payments due April 15, June 15, September 15, and January 15. The simplest way to stay penalty-proof is the safe harbor — pay 100% of last year's total tax (110% if your adjusted gross income was over $150,000), split evenly across the four dates. Do that and you generally avoid underpayment penalties even in a much bigger year, though you'll still owe the balance in April.

Why commission income catches brokers off guard

If you spent any part of your career as a W-2 employee, taxes were something that happened to your paycheck automatically. As a 1099 broker, nothing is withheld — not income tax, not Social Security, not Medicare. The full commission hits your account, and the tax obligation quietly accrues in the background. The IRS doesn't wait until April to expect its share; it wants payment roughly as the income is earned.

The four due dates (and why they aren't really quarterly)

Estimated payments are due April 15, June 15, September 15, and January 15 of the following year. Note the spacing: the second "quarter" covers only April and May, and the fourth covers four months. If a due date lands on a weekend or holiday, it rolls to the next business day. Missing the rhythm — especially that early June 15 date — is one of the most common ways brokers rack up underpayment penalties without realizing it.

The safe harbor: your penalty shield

You generally avoid underpayment penalties if your timely payments during the year reach one of these thresholds:

90% of the current year's tax — hard to hit when you don't know what the year will bring, or
100% of last year's total tax — or 110% if your prior-year adjusted gross income was over $150,000, which describes most established CRE brokers.

For lumpy commission income, the prior-year safe harbor is usually the practical choice: it's a fixed, knowable number you can lock in on January 1 regardless of how the year unfolds.

Illustrative Example · Prior-Year Safe Harbor

Last year's total tax (from your Form 1040)$52,000

Prior-year AGI over $150,000, so safe harbor = 110%$57,200

Four equal payments (Apr 15 / Jun 15 / Sep 15 / Jan 15)$14,300 each

Illustrative only. "Total tax" is a specific line on your return — not your balance due and not your withholding. If this year turns out bigger than last year, the safe harbor protects you from penalties, but the remaining balance is still due when you file.

When income is lumpy: the annualized method

Suppose most of your income lands in the fourth quarter — one big closing in November. Equal quarterly payments would have you prepaying tax on money you hadn't earned yet. The annualized income installment method (Form 2210, Schedule AI) lets you match each payment to what you actually earned through that point in the year. It's more paperwork at filing time, but for genuinely back-loaded years it can be the difference between a fair result and financing the IRS interest-free.

The S Corp advantage: withholding is treated as even

Here's a planning lever most brokers don't know about. Estimated payments are credited when paid — but tax withheld from wages is treated as paid evenly throughout the year, no matter when it actually comes out. If you run your practice through an S Corp and pay yourself a salary, withholding on a year-end bonus payroll can retroactively cure underpayments from earlier quarters. It's one of several cash-flow tools that come with running payroll properly, and it's built into how we manage estimates inside our S Corp Management service.

Don't forget the state

Most states with an income tax run their own estimated payment system with similar due dates and their own penalty rules. If you work deals across state lines — common in CRE — you may owe estimates in more than one state. Entity-level taxes like PTET elections add another layer with their own payment deadlines.

Safe harbor is not the same as saving enough

One caution: the safe harbor only protects you from penalties. In a breakout year, paying 110% of last year's tax can leave a large balance due the following April. Penalty-proof and prepared are two different things — a good system sets aside a realistic percentage of each commission as it lands, and treats the safe harbor as the floor, not the plan.

By Mike Salmon, CFP®, EA · Principal, For CRE Brokers · Moisand Fitzgerald Tamayo, LLC Published July 12, 2026 · Reviewed July 12, 2026

This article is general education for commercial real estate brokers, not individualized tax, legal, or investment advice. Figures are illustrative and rounded. Consult a qualified professional about your specific situation.

Quick answers

What happens if I miss an estimated payment?

The underpayment penalty works like interest — it accrues from the missed due date at a rate the IRS adjusts quarterly. It's not a cliff, so catching up as soon as possible limits the damage. The penalty is computed quarter by quarter, which is why paying everything on April 15 doesn't cure earlier misses.

Do I calculate estimates on gross or net commissions?

Net — your commissions minus legitimate business expenses. But remember the estimate needs to cover both income tax and self-employment tax (or payroll tax, if you're an S Corp), so the percentage of each check to set aside is often higher than brokers expect.

Can I just pay it all when I file in April?

You can, but you'll likely owe underpayment penalties on top of the tax, because each quarter's shortfall accrues its own penalty from its own due date. For a broker with meaningful income, that habit gets expensive.

How do I actually make the payments?

Federal payments go through IRS Direct Pay or EFTPS (or by check with Form 1040-ES vouchers). Most states have a similar online portal. If you're an S Corp with payroll, some of the work shifts into withholding instead.

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S Corp Management — tax planning, bookkeeping, payroll, and 1120S tax preparation — built exclusively for 1099 commercial real estate brokers. A service of Moisand Fitzgerald Tamayo, LLC.

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