Story by Stacy Johnson CPA

Next Tuesday, Sept. 15, is the IRS deadline for third-quarter estimated taxes. If you’re retired and you’ve never sent the IRS a check outside of April, you may be wondering why I’m bothering you with this.

IRA and 401(k) withdrawals. Every dollar you pull from a traditional account is ordinary income. Your custodian will withhold 10% by default on a one-time IRA withdrawal, or 20% on a one-time 401(k) withdrawal, according to IRS Form W-4R. You can adjust the IRA rate up or down; the 401(k) rate can only go higher. For most retirees, neither default is close to enough.

Social Security. The Social Security Administration says your benefits become taxable once your combined income passes $25,000 if you’re single or $32,000 if you’re married filing jointly. Yet nothing is withheld unless you ask.

Side income. Consulting, a rental, selling stuff online, part-time work paid on a 1099. Nobody withholds a penny on any of it.

Add it up and you can owe several thousand dollars in April with nothing paid in. That’s when the IRS reminds you that we live in a pay-as-you-go system, and April was never the only deadline.

Here’s the good news: If you’re new to this, I wrote a broader guide in April on the tax changes in retirement nobody tells you about. This piece is narrower. It’s about Tuesday, and what happens if you miss it.

What missing Tuesday costs you

The IRS calls it an underpayment penalty, but it works like interest. The rate is set quarterly. In IR-2026-98, released Aug. 21, the IRS said the rate for individuals stays at 7% through Dec. 31.

Let’s run the numbers. Say you’ll owe $6,000 for 2026 and you have no withholding. Your Sept. 15 installment is $1,500. Skip it and pay everything on April 15 instead, and that $1,500 sits unpaid for seven months at 7%. That’s about $61.

Not ruinous. But do it for all four installments and you’re pushing nearly $250 for the year, for nothing. And I know plenty of retirees who’ll drive across town to save $5 on a prescription. Let’s not hand the IRS over $200 for the privilege of being disorganized. Worse, the penalty is an announcement that you don’t have a system. And without a system, next year’s bill will surprise you too.

The two escape hatches the IRS gives you

You don’t have to hit your tax bill on the nose. The IRS offers two safe harbors. Land in either and there’s no penalty, even if you still owe money in April.

Safe harbor No. 1: You owe less than $1,000 after subtracting withholding and refundable credits. Simple. If your withholding nearly covers you, you’re fine.

Safe harbor No. 2: Through withholding and estimated payments, you’ve paid in at least 90% of this year’s tax, or 100% of last year’s tax, whichever is smaller. If your 2025 adjusted gross income topped $150,000 ($75,000 married filing separately), the prior-year number becomes 110%, per Form 1040-ES.

The prior-year rule is the one I’d point most retirees toward. Look at line 24 of your 2025 return, total tax. Pay that amount in over 2026, in four roughly equal pieces, and the IRS leaves you alone. No guessing what this year’s income will be.

Only caveat: If your income jumped this year, say from a big IRA withdrawal, the prior-year harbor still protects you from the penalty. It won’t protect you from the bill. Set the difference aside.

The trick that makes quarterly payments disappear

Here’s what I tell anyone who hates writing checks to the IRS four times a year: Don’t. Use withholding instead.

Withholding and estimated payments are treated differently, and the difference is in your favor. The IRS treats withholding as paid in four equal installments across the year, no matter when the money was actually withheld. Estimated payments count only on the day you send them.

Read that again, because it’s the whole trick. Tax withheld in December counts as if a quarter of it were paid back in April. Nobody withheld anything from you in April? Doesn’t matter.

Two ways to use it:

Withhold from Social Security. Fill out Form W-4V and give it to Social Security, not the IRS. You pick 7%, 10%, 12% or 22% of your monthly benefit, or change it online through your my Social Security account.

Pick a percentage that, combined with any pension withholding, covers your total bill.

The year-end IRA move. If you’re behind in December, take an IRA withdrawal and tell your custodian to withhold a big chunk of it, even 100%, using Form W-4R.

The money goes straight to the IRS as withholding, which means it’s treated as paid evenly all year. Your penalty, if you had one, largely evaporates.

Yes, the withdrawal itself is taxable income. But if you’re taking required minimum distributions anyway, you can direct the whole RMD’s withholding toward your bill. For a lot of retirees, that one December transaction replaces four quarterly checks.

If you’re retired and missed Tuesday, this is your fix. You’ve got until Dec. 31 to make the withholding catch up.

How to pay before Tuesday if you’d rather just pay

If you’d rather stay on the quarterly system, or you’re too far behind for withholding alone to close the gap, pay by Tuesday.

Skip the paper voucher and the stamp. Use IRS Direct Pay. It’s free, it pulls from your checking account, and you select “estimated tax” and tax year 2026. You can schedule the payment ahead and change or cancel it up to two days before it goes out.

Pay late, and the meter runs from Sept. 15 until the day the money arrives. It’s not a cliff, it’s a slope. Pay a week late and it costs pennies. Wait until April and you’re back to the $61 example above.

Stuck for cash? Pay what you can. The penalty is figured on the shortfall, so every dollar in reduces it.

The bottom line

The IRS isn’t hunting retirees. But the tax system was built around paychecks, and once you stop getting one, it’s your job to replace the withholding your employer used to handle.

You’ve got three defenses: pay estimates on time, aim at a safe harbor, or let withholding do the work. The third one is the one I’d choose. Set a percentage on Social Security, adjust your IRA withholding in December, and you’ll never think about Sept. 15 again.

One last thing. If you retired after age 62 this year or last and underpaid because you didn’t know the rules, the IRS can waive the penalty for reasonable cause. Ask. It’s the rare time the system gives newcomers a break.