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Key Takeaways

• Self-employed therapists who expect to owe $1,000+ in federal taxes must make quarterly estimated payments
• You can avoid IRS penalties for underpaying your taxes by using the safe harbor rule (paying 100% of what you paid last year)
• If your practice’s income is uneven, considering annualizing your income with Form 2210 Schedule A1 

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If your therapy practice owes $1,000 or more in federal taxes, you need to make quarterly estimated tax payments. 

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That means estimating what your total income for the current year will be, calculating your tax liability, and submitting it in the form of four quarterly payments to the IRS. If you pay less than the total amount you owe, the IRS may charge you a “Failure to Pay” penalty.

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Can you pay estimated taxes late? What if you miss a quarterly tax payment? Questions like these create a lot of stress for self-employed therapists.

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But there’s good news: A few simple, tried-and-true methods can help you estimate your tax liability while avoiding underpayment penalties and keeping your finances on track. 

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Here’s what you need to know.

What are quarterly estimated tax payments?

When you work for someone else as an employee, your employer withholds income tax from your paycheck and remits (sends) it to the IRS.

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But when you’re self-employed, it’s up to you to make those payments. If your total tax liability is less than $1,000, you can pay in a lump sum after the end of the year. (If your business is incorporated, the threshold is $500). Otherwise, the IRS expects you to pay in four quarterly installments.

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Keep in mind that this threshold applies to your total tax owing. If you work as an employee and earn self-employment income from your therapy practice on the side, both your income as an employee and your income as a business owner count towards your total tax liability.

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Here’s where it gets tricky:

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• With quarterly estimated payments, you’re paying your total annual tax liability in the year in which you’re earning income. 
• At the time you’re making those payments, you don’t know exactly what your total income for the year will be, so you don’t know what your total tax liability will be, either.
• You have to estimate the total amount you’ll owe, divide it by four, and pay in quarterly installments.

You may also be required to make quarterly state tax payments in the state where you practice. See our guide to paying state income tax as a therapist for more info

What happens if you miss a quarterly tax payment?

If you miss a quarterly tax payment, the IRS charges interest on the amount owing. This rate is subject to change each quarter. Check the IRS table of quarterly interest rates for the most recent figure.

Can you pay estimated taxes late? Yes — here's what to do if you can't pay your quarterly taxes. But even if you make up for a late payment by paying extra with your next installment, you’ll still owe penalties for the time you left the IRS waiting for the payment. And each quarterly installment is treated separately for tax purposes: If you miss more than one quarterly payment, penalties can snowball.

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The IRS doesn’t notify you if a quarterly tax payment is late. Interest starts accumulating quietly; in many cases, business owners don’t realize they’ve been charged the penalty until they file their taxes after the end of the year. 

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According to Heard’s 2026 Financial State of Private Practice Report, in 2025, about one out of every five therapists who thought they paid all of their quarterly taxes did not. 

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The fourth quarterly payment is due January 15th, after the end of the financial year. If that deadline passes and you’ve paid less than the total amount you owe in taxes, the IRS begins charging more interest in the form of the “Failure to Pay” penalty. That’s calculated at 0.5% of the amount owing, up to a maximum of 25%.

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You can avoid the “Failure to Pay” penalty by taking advantage of the safe harbor rule, covered below.

Do you need to make quarterly estimated payments your first year in business?

Even if it’s your first year operating as a self-employed therapist, you owe quarterly taxes.

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The only exception is if you owe less than $1,000 in taxes to the IRS, or if: 

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1. You did not owe any taxes the year before, and weren’t required to file a return; and
2. You were a US citizen or resident for the entire course of the year; and
3. Your tax year was 12 months in duration.

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Keep in mind that the first point applies to all tax returns, not just returns reporting self-employment income. If you worked as an employee and earned income the previous year, then you qualify for quarterly estimated payments for your first year in business.

Can therapists annualize their income?

As a self-employed therapist, you can choose to annualize your income by filing Form 2210, Schedule A1.

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When you annualize your income, you pay an amount each quarter that corresponds to the amount you earned during that quarter.

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So, rather than estimating the total amount you’ll owe for the year and dividing it by four, each quarter you:

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1. Calculate the total amount you earned over the three-month period
2. Multiply it by an annualized factor for that quarter (listed on Form 2210, Schedule A1)
3. Deduct business expenses
4. Calculate the total amount you owe for that quarter based on your tax bracket

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The benefit of this approach is that you only pay taxes on what you earned during that quarter, which can be helpful if your income is uneven.

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For instance, suppose it’s your first year in private practice and you’re still filling out your client list:

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1. In Q1, you earn $2,000
2. In Q2, you earn $6,000
3. In Q3, you earn $11,000
4. In Q4, you earn $14,000

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Total annual income: $33,000

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Using the standard method, you would pay the total taxes you owe on your $33,000 income, distributed evenly across all four quarters.

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Using the annualized method, you would pay the taxes you owe on $2,000 for your first quarterly installment, the taxes you owe on $6,000 for your second quarterly installment, and so on.

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That’s how it works in theory. In practice, it’s a little more complicated—there are annualized factors to take into account, and you’ll need to calculate deductible expenses. 

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If you think annualizing your income would benefit your practice, consult with an accountant for help filing Form 2210 and calculating your payments.

How to estimate quarterly tax payments for your therapy practice

If you use Heard, your financial team will estimate your quarterly taxes for you, and help make sure you pay them on time.

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If you don’t use Heard, there are two methods you can use to estimate your quarterly tax payments as accurately as possible, while protecting yourself from IRS penalties: With a financial projection, and with the safe harbor rule.

Estimating quarterly tax payments with a financial projection

If you can accurately project how much you’re going to earn during the course of the year, you can use that projection to estimate what you owe in quarterly estimated taxes.

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This method works best if you have steady, recurring income month to month. For instance:

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• You have a stable list of long term clients who you see regularly 
• You’re working your maximum clinical hours per week and have a long waitlist; when clients are done treatment, you are able to quickly fill their spots in your calendar
• You contract with a treatment facility or other organization, and have a regular weekly time commitment that makes up the majority of your billable hours

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On the other hand, if your income is irregular and hard to predict, you may be better off using the safe harbor rule (covered below).

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Using one or several months as an example, project your income for the entire year (for instance, multiplying one month by twelve). Then, use Form 1040-ES to calculate your tax owed. 

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Divide your total estimated tax owed by four. That’s how much you pay for each quarterly payment.

Estimating quarterly tax payments using the safe harbor rule

Instead of creating a projection for this year’s income, you may choose to use last year’s income to estimate your quarterly tax payments.

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So long as your estimate is based on last year’s income, you will not be penalized by the IRS if you underpay. This is referred to as the safe harbor rule.

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Simply take your tax bill from the previous year, and divide it by four. That’s what you’ll pay in quarterly taxes this year.

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As the year progresses, keep an eye on your monthly income by reading your profit and loss statements (P&Ls) and, if possible, comparing them with last year’s P&Ls. If you’re earning more income than you did last year, it means the amount you owe in tax will be larger. 

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Even though the safe harbor rule protects you from being penalized, you’ll still owe the IRS additional tax if you underpay. It’s better to be aware of that now, and put aside some extra money to cover it, than being surprised when tax season arrives.

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For more, check out Therapist Tax Guide: The Safe Harbor Rule.

Overpaying quarterly taxes for your therapy practice

If you overpay your taxes, the IRS will issue you a tax refund. Provided you sign up for direct deposit, you should receive your refund within 21 days of the filing deadline.

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You may overpay your taxes if:

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• You base your total payment on the amount you paid the previous year (ie. when following safe harbor guidelines)
• You overestimate your income or fail to account for deductible expenses and credits
• You err on the side of paying extra “just in case”

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Overpaying does not incur IRS penalties, but it does put you at a financial disadvantage.

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Many taxpayers see a tax refund as a windfall—a cash bonus after the end of tax season. In reality, your tax refund is income you have already earned.

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Unless the IRS is late paying your refund, the money you overpay in taxes effectively acts as an interest-free loan to the IRS. You’re unable to reinvest the funds in your business, use them to cover operating expenses, or even enjoy the modest interest they would accrue sitting in a savings account.

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It benefits you to estimate your quarterly payments as accurately as possible and avoid overpaying. Tax refunds are nice, but it’s even nicer to make the most effective use possible of your hard-earned income. 

Quarterly tax deadlines for therapists

The 2026 quarterly tax deadlines for therapists are:

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• April 15, 2026: Deadline for Q1 estimated tax payments
• June 15, 2026: Deadline for Q2 estimated tax payments
• September 15, 2026: Deadline for Q3 estimated tax payments
• January 15, 2027: Deadline for Q4 estimated tax payments

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Note that tax payments carry into the next year. So, on January 15, 2027 you’ll pay estimated taxes for the fourth quarter of 2026.

How to pay quarterly taxes for your therapy practice online

The easiest way to pay your quarterly taxes online and make sure you never miss a payment date is to enroll in the Electronic Federal Tax Payment System (EFTPS).

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Your EFTPS account allows you to pay your federal taxes online. Importantly, it lets you schedule your quarterly payments in advance—so the money is automatically transferred from your bank account to the IRS on the due date.

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To enroll in EFTPS, you’ll need:

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• An Employer Identification Number (EIN)
• A business checking account

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You can learn more from the EFTPS website.

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If you pay quarterly taxes, you need to have enough cash on hand to cover them every three months. The best way to make that happen is by creating a budget for your therapy practice.

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Summary

• If you expect to owe $1,000+ in federal taxes, you must make quarterly estimated payments, even if it’s your first year in business
• In the event you miss a payment, the IRS won’t notify you, but interest will start accumulating on the amount you owe
• Annualizing your income with Form 2210 Schedule A1 can relieve financial pressure if your income is uneven throughout the year
• The safe harbor rule protects you if you underpay your total tax liability for the year, but doesn’t protect you from penalties for late quarterly payments
• Quarterly payments are due on the 15th (or next business day) of April, June, September, and January

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Visit our Therapist Tax Center for everything you need to know about taxes as a practice owner.

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This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult their own attorney, business advisor, or tax advisor with respect to matters referenced in this post.

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Bryce Warnes is a West Coast writer specializing in small business finances.

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