How to File Quarterly Estimated Taxes as a New Therapy Practice
Learn the step-by-step process for filing quarterly estimated taxes as a new therapy practice, including deadlines, calculation methods, and payment options.
If you’re a new therapy practice owner, you’re now responsible for paying taxes on your income throughout the year, not just at tax time. The IRS requires quarterly estimated tax payments if you expect to owe at least $1,000 in taxes for the year. This guide walks you through the exact steps to calculate, file, and pay your estimated taxes, with current figures for 2026.
Understand Your Tax Obligations
As a sole proprietor, partner, or S-corp owner, you don’t have an employer withholding taxes from your paycheck. Instead, you pay estimated taxes quarterly. These payments cover both income tax and self-employment tax (Social Security and Medicare). For 2026, the self-employment tax rate is 15.3% on net earnings up to $176,100 (Social Security wage base) and 2.9% for Medicare on all net earnings above that.
Your total tax rate depends on your taxable income. For a typical therapy practice earning $60,000 to $120,000 in net profit, your combined federal rate (income + self-employment) will likely range from 25% to 35%. State taxes add another 0% to 13% depending on your state.
Step 1: Estimate Your Annual Income and Deductions
Start by projecting your practice’s net profit for the year. Net profit is your total revenue minus allowable business expenses. Common deductions for therapy practices include:
- Office rent or home office deduction
- Professional liability insurance
- Continuing education courses
- Licensing fees
- Marketing and website costs
- Health insurance premiums (self-employed deduction)
- Retirement plan contributions (SEP IRA, solo 401(k))
Use your previous year’s tax return as a baseline if you have one. If not, estimate based on your current monthly revenue and expenses, then annualize.
Step 2: Calculate Your Estimated Tax
You have two methods to calculate your estimated tax:
Method 1: Annualized Income Installment Method This method is more accurate if your income varies throughout the year. You calculate your tax based on your actual income for each quarter, then pay accordingly. Use IRS Form 2210 to report this method.
Method 2: Regular Installment Method This is simpler: divide your total expected tax for the year by four. To find your total expected tax, use the IRS Tax Withholding Estimator or your previous year’s tax liability. For a new practice, a common approach is to pay 25% to 30% of your net profit each quarter.
Example: If you expect a net profit of $80,000, your federal tax (including self-employment) might be around $22,000. Divide by 4: pay $5,500 each quarter. Add state tax if applicable.
Step 3: Know the 2026 Payment Deadlines
Quarterly estimated tax payments are due on these dates in 2026:
| Quarter | Payment Period | Due Date |
|---|---|---|
| Q1 | Jan 1 - Mar 31 | April 15, 2026 |
| Q2 | Apr 1 - May 31 | June 15, 2026 |
| Q3 | Jun 1 - Aug 31 | September 15, 2026 |
| Q4 | Sep 1 - Dec 31 | January 15, 2027 |
If a due date falls on a weekend or holiday, the deadline moves to the next business day.
Step 4: Pay Your Estimated Taxes
You can pay electronically, by mail, or through a tax professional. The fastest and most secure method is the IRS Direct Pay system, which is free. You can also use the Electronic Federal Tax Payment System (EFTPS), which requires enrollment. For state taxes, check your state’s revenue department website for payment options.
Payment methods:
- IRS Direct Pay: Free, no registration needed for individuals.
- EFTPS: Free, but requires a one-time enrollment process.
- Credit/debit card: Convenient but charges a processing fee (around 1.87% to 2.5%).
- Check or money order: Mail with Form 1040-ES voucher.
Step 5: Adjust Payments as Your Income Changes
Your estimated payments are just that: estimates. If your income increases or decreases significantly, adjust your next quarterly payment. For example, if you land a large contract in Q2, increase your Q3 payment to avoid underpayment penalties. If you have a slow quarter, you can reduce your payment, but be careful not to fall below the safe harbor threshold.
Avoid Underpayment Penalties
The IRS charges a penalty if you underpay your estimated taxes. To avoid this, you must pay at least 90% of your current year’s tax liability or 100% of the previous year’s tax liability (110% if your adjusted gross income was over $150,000). For new practices, paying 100% of last year’s liability is often the easiest safe harbor, but if you had no tax liability last year, you may not have a penalty.
Use a Separate Savings Account
Set aside a portion of every client payment into a dedicated tax savings account. A common rule is to transfer 25% to 30% of your net income to this account. This ensures you have the funds when quarterly payments are due. Many practice owners use a high-yield savings account earning 4% to 5% APY, which also earns a little interest.
Work with a Tax Professional
If you’re unsure about your calculations or want to optimize your deductions, consider hiring a CPA or enrolled agent who works with small business owners. Fees range from $200 to $500 for a quarterly tax planning session, or $500 to $1,500 for full tax preparation and planning. This cost is tax-deductible as a business expense.
FAQ
What if I miss a quarterly deadline? If you miss a deadline, pay as soon as possible to minimize penalties. The IRS charges interest on late payments, and the penalty rate is currently 7% per year, compounded daily. You can request a penalty waiver if it’s your first time or if you have a reasonable cause.
Do I need to pay state estimated taxes too? Most states require estimated tax payments if you owe state income tax. Check your state’s requirements; some states have different thresholds and deadlines. For example, California requires payments if your tax liability exceeds $500.
Can I pay my estimated taxes with a credit card? Yes, but be aware of processing fees. The IRS allows credit card payments through third-party processors, which charge a convenience fee of about 1.87% to 2.5% of the payment amount. Weigh the fee against any rewards or cashback you might earn.
How do I know if I’m paying enough? Use the IRS Tax Withholding Estimator or review your payments after each quarter. If your actual tax liability is higher than your payments, you’ll owe the difference when you file your return, plus potential penalties. If you’re consistently underpaying, increase your next payment.
The Bottom Line
Filing quarterly estimated taxes as a new therapy practice doesn’t have to be overwhelming. Start by estimating your income, calculating your tax, and setting up automatic payments through IRS Direct Pay. Mark the four due dates on your calendar and set aside 25% to 30% of your income in a separate account. If you’re ever unsure, a tax professional can help you stay compliant and minimize surprises. By staying on top of your estimated taxes, you’ll avoid penalties and keep your practice financially healthy.