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Content provided for general information. Talk to your advisor to learn about recent updates or other rules that may apply to your situation.

Estimated tax payments can be a somewhat perplexing aspect of the U.S. tax system. The Internal Revenue Service (IRS) requires individuals, including those filing jointly, to pay taxes on their income throughout the year, usually in four installments, to prevent underpayment penalties. The number of estimated tax payments can vary based on your income, filing status, and various factors. In this blog post, we'll explore the rules surrounding estimated tax payments and whether you can exceed the typical limit of two payments by using different payment methods. We'll also discuss the benefits of spreading your payments over multiple dates for tracking and responsibility purposes.

Understanding Estimated Tax Payments

Before we dive into the details of exceeding the usual two estimated tax payments, let's first understand what estimated tax payments are and why they are important.

Estimated tax payments are a way for individuals to pay their income tax obligations throughout the year, rather than in one lump sum when they file their annual tax return. These payments help the IRS ensure a steady flow of tax revenue. They are particularly relevant for taxpayers who have income not subject to withholding, such as self-employed individuals, business owners, or individuals with significant investment gains.

For individuals, the IRS typically requires four estimated tax payments, with due dates on April 15, June 15, September 15, and January 15 of the following year. However, in your case, it seems that you realized significant gains in the fourth quarter (Q4) that will result in underpayment unless you make estimated tax payments.

Is Exceeding the Two-Payment Limit Possible?

The question you've raised is whether it's possible to exceed the typical limit of two estimated tax payments by using different payment methods for the third and fourth payments. The short answer is yes, you can make more than two estimated tax payments in a year. However, there are some important considerations to keep in mind.

  1. Payment Methods: The IRS allows several methods for making estimated tax payments. You can use electronic payment methods like EFTPS (Electronic Federal Tax Payment System), debit cards, credit cards, or direct pay through the IRS website. Each of these methods can be used to make one or more payments.
  2. Spreading Out Payments: You mentioned that you would prefer to split your payments for tracking and responsibility reasons. This is a valid approach. Spreading your estimated tax payments over multiple dates can help you manage your cash flow and budget more effectively. It can also reduce the risk of a significant financial burden when the due date for a large payment approaches.
  3. Payment Dates: In your situation, you considered making the third estimated tax payment as if it were for the third quarter (Q3) due on September 15. This is a reasonable approach, especially if you weren't aware of the investment gains until after the Q3 deadline. However, keep in mind that making a late payment can result in underpayment penalties and interest charges. It's essential to calculate the correct amount to pay to avoid these penalties.
  4. The 2-Payment Limit: The limit of two estimated tax payments that you've mentioned is not a strict rule. It's more of a guideline to help taxpayers stay on track throughout the year. The IRS doesn't restrict you from making more than two payments if that's what suits your financial situation and planning.

Benefits of Multiple Estimated Tax Payments

Splitting your estimated tax payments into more than two installments has its advantages:

  1. Better Budgeting: Smaller, more frequent payments can make it easier to budget for your tax obligations, rather than facing a large lump sum at tax time.
  2. Reduced Risk: Spreading out your payments helps reduce the risk of missing a single, large payment and incurring penalties.
  3. Improved Tracking: Multiple payments can make it easier to track your tax payments and ensure you meet your obligations.
  4. Cash Flow Management: By making timely payments throughout the year, you can better manage your cash flow and avoid unexpected financial challenges.


In conclusion, it is possible to exceed the two estimated tax payment limit by using different payment methods or by making additional payments to meet your tax obligations. The key is to plan and calculate your payments correctly to avoid underpayment penalties and interest charges.

Remember that the IRS encourages taxpayers to make timely and accurate estimated tax payments to avoid potential penalties. Consult a tax professional or use IRS tools and resources to ensure that you are on the right track for your specific tax situation. Splitting your payments for tracking and responsibility reasons is a valid approach, but it should be done with careful consideration of the due dates and amounts to avoid any negative consequences.