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Estimated Tax Payments for US Expats: Rules, Deadlines & More

Every US citizen is required to file an annual tax return, even while living overseas. In addition to this, some expats have to estimate and pay taxes throughout the tax year. According to the IRS, if you expect to owe at least $1,000 after filing your tax return, you’re required to make estimated tax payments throughout the year. The good news? With the right approach, you can avoid underpayment penalties and the interest that comes with them. Currently, the interest rate is 7% per year, compounded daily, as announced by the IRS in November 2025.

Here’s what matters most: many expats can reduce their US tax bill to less than $1,000 (or eliminate it entirely) using the Foreign Earned Income Exclusion or Foreign Tax Credit. If that’s you, you’re not obligated to make estimated tax payments at all. For those who do need to pay estimated taxes, this guide will walk you through the requirements and options to stay compliant and avoid costly penalties.

Key Takeaways

- Filing an extension doesn’t extend your payment deadline. Taxes are still due by the original deadline, and interest accrues on any unpaid amount.

- Expats who expect to owe at least $1,000 after filing their tax return are required to make estimated tax payments throughout the year or face an underpayment penalty.

- Expats should use the worksheet in the instructions for IRS Form 1040-ES to calculate estimated taxes.

- Estimated tax payments can be made online, over the phone, or through the mail.

- The IRS charges 7% interest per year (compounded daily) on unpaid tax balances, separate from underpayment penalties.

- Filing an extension doesn’t extend your payment deadline. Taxes are still due by the original deadline, and interest accrues on any unpaid amount.

Who Is Required to Make Estimated Tax Payments?

If you receive income that does not have tax withheld at the source, you may be required to make estimated tax payments. This includes self-employed individuals who receive employment income from a foreign employer that does not withhold US taxes or have significant investment income.

In general, if you expect to owe $1,000 or more in taxes for the year, you should be making estimated tax payments. The IRS requires that estimated tax payments be made throughout the year, typically in four equal installments. These payments are due in April, June, September, and January of the following year.

It’s important to know that failing to make estimated tax payments can result in penalties and interest charges. The IRS uses a complex formula to calculate these penalties, which can vary depending on the amount owed and the number of days late.

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Do I Need to Pay Estimated Taxes While Living Abroad?

The rules for paying estimated taxes are the same regardless of whether you live in the US or abroad. Specifically, you must make estimated tax payments if you expect to owe at least $1,000 when you file your annual tax return. You will need to be proactive in determining this since the IRS won’t inform you of this obligation until after you’ve failed to comply.

For example, if you earn your full-time income as a self-employed business owner, you will almost certainly need to make estimated tax payments during the year. You will do this by estimating your tax liability for each financial quarter and then submitting payment to the IRS by the appropriate deadline. If you wait until you file your tax return to pay what you owe as a lump sum, you will likely have to pay an underpayment penalty.

Of course, as an expat, you may not owe anything on your income at all. The IRS provides a variety of tax benefits for Americans living overseas, such as:

By utilizing these benefits, many expats can reduce their US tax bill to less than $1,000 or even eliminate it. In that case, you would not be obligated to make estimated tax payments while living abroad.

How Much Should I Pay in Estimated Taxes?

If you are required to pay estimated taxes, you will need to calculate what you owe. Estimating your tax liability may be complicated or straightforward, depending on the details of your income. If you expect to owe the exact amount that you did last year, then you can divide that number by four and submit one-fourth of that amount per financial quarter.

Let’s look at an example. In late 2024, Sarah moved to Japan to work for a Japanese IT company. Because her foreign employer doesn’t deduct U.S. taxes from her salary, she is responsible for paying her own tax bill. Last year, Sarah owed $30,000 in US taxes. Since nothing about her income has changed since then, she expects she will owe roughly the same amount for the 2025 tax year.

So, Sarah divides her estimated $30,000 tax bill by four and pays one-fourth of it each quarter. This means that her quarterly estimated tax payments are $7,500 each ($30,000 ÷ 4 = $7,500).

If your tax situation has changed since your last tax bill, you will need to perform some more complex calculations:

First, estimate your income for the whole year.
Then, determine what taxes will apply to that income and at what rates. (This may include the self-employment tax as well as the income tax.)
Factor in any deductions, credits, or exclusions available to you.
Estimate your final tax debt for the year.
Divide the amount you expect to owe into four parts to cover your quarterly estimated tax payments.

Alternatively, you can calculate your income and tax liability for each individual quarter. The quarterly payments do not have to be equal in amount. This may be the best option if your income fluctuates throughout the year.

Pro Tip

Consider opening a separate savings account for your taxes. As you receive income, you can set a percentage of it aside for your estimated tax payments. For example, if your tax bill is typically 30% of your income, deposit 30% of all income you receive into your dedicated savings account. This will simplify your calculations and ensure you have the money ready when it’s time to pay.

When Are Estimated Tax Payments Due?

Estimated tax payments are due on a quarterly basis. In the table below, you can see the due dates for each financial quarter for the 2025 tax year (filed in 2026).

Financial Quarter	Taxable Period	Due Date
Quarter 1	January 1 – March 31	April 15, 2026
Quarter 2	April 1 – May 31	June 16, 2026
Quarter 3	June 1 – August 31	September 15, 2026
Quarter 4	September 1 – December 31	January 15, 2027

You can also opt for a monthly payment schedule if you prefer. To do this, calculate and submit payments at your preferred cadence throughout the year.

What Is the Underpayment Penalty for Estimated Tax Payments?

Taxpayers who fail to submit estimated tax payments when required are subject to an underpayment penalty. This penalty is not applied as a static percentage or flat fee. Instead, it will vary based on the following:

The total amount of unpaid taxes
The time of delinquency between the due date and the payment
The interest rate for the period in which the taxes were due

The penalty is calculated separately for each quarterly payment period. The IRS applies an interest rate to the underpayment amount for each day it remains unpaid. As of January 2026, the interest rate for individual taxpayers is 7% per year, compounded daily, as announced by the IRS.

Here’s how it works: If you underpay your first quarter payment by $1,000 and don’t make it up until you file your return months later, you’ll owe a penalty calculated at 7% annual interest on that $1,000 for the number of days it remained unpaid.

The total penalty is capped at 25% of the unpaid amount. The IRS will notify delinquent taxpayers of this penalty after they file their annual tax returns.

How Do Interest and Penalties Work Together?

The difference between the underpayment penalty and interest charges is essential:

Underpayment Penalty: This is charged when you don’t pay enough estimated tax during the year. The penalty is calculated using the 7% annual rate, applied daily to each underpayment for the period it remains unpaid.

Interest on Unpaid Tax Balance: Even if you don’t trigger the estimated tax penalty (perhaps you paid enough throughout the year), if you end up owing a tax balance when you file your return and don’t pay it by the due date, you’ll owe interest on that unpaid balance. The interest rate is the same (7% per year, compounded daily), and it accrues from the original due date (typically April 15, or June 15 for expats) until you pay in full.

Important

Filing an extension for your tax return doesn’t extend the payment due date. Your tax payment is still due by the regular deadline (April 15 for most taxpayers, June 15 for expats abroad). Interest will accrue on any unpaid amount from that due date, even if you have a valid extension to file your return later.

You can use IRS Form 2210 to determine if you owe the underpayment penalty and, if so, how much the fine will be. This will allow you to pay the penalty immediately without accruing further interest.

How Can I Avoid the Underpayment Penalty?

Because estimated tax payments are just that (an estimate), it may seem impossible to know exactly how much you will owe. So how can you be sure you’re paying enough? This is especially problematic for taxpayers whose annual income fluctuates unpredictably.

The good news is that the IRS gives some leeway for underpayment. You don’t have to pay 100% of what you owe. As long as you pay at least 90% of your current year’s tax liability, you will not be charged the underpayment penalty.

If even that seems too risky, the IRS offers another option. If you pay 100% of the previous year’s tax debt (or 110% for high-income-earning individuals with adjusted gross income above $150,000), you will not be charged with underpayment.

For example, if you paid $15,000 in taxes last year, you will not be charged an underpayment penalty as long as you pay at least $15,000 in estimated taxes for the current year, even if your final tax debt ends up being higher than that. Of course, you will still need to pay any unpaid taxes when you file your annual return, but you will not be subject to the additional penalty.

Important

If you’re self-employed abroad, remember that the Foreign Earned Income Exclusion does NOT eliminate your self-employment tax obligation. You’ll still owe 15.3% on your net business income for Social Security and Medicare, even if you owe $0 in federal income tax.

How Do I Pay Estimated Taxes with Form 1040-ES?

You will use the worksheet in IRS Form 1040-ES to calculate and pay your estimated tax. You have a few options for submitting payment.

1. Paying Estimated Taxes Electronically

Submitting your estimated tax payments online by direct bank transfer is generally the easiest and safest choice. Plus, you’ll be able to access your payment history more easily when you file your expat tax return.

The IRS offers several options for paying your estimated taxes online. For most people, the simplest option is the Electronic Federal Tax Payment System (EFTPS). Enrolling is easy. Registration usually takes no longer than ten minutes. However, after enrolling, you will have to wait for a PIN number to arrive by mail.

2. Paying Estimated Taxes by Phone

Estimated tax payments can also be made over the phone using a debit or credit card. This will mean calling one of the following IRS-approved payment services:

You can find the phone numbers for these services on page four of the instructions for Form 1040-ES.

3. Paying Estimated Taxes via Mobile

To pay estimated taxes via mobile phone, download the IRS2Go app and follow the instructions provided.

4. Paying Estimated Taxes by Mail

You can pay your estimated taxes by attaching a check or payment voucher to your completed Form 1040-ES and mailing both to the appropriate IRS address. The IRS does not recommend this approach. To learn more, refer to page four of the Form 1040-ES instructions provided on the IRS website.

5. Paying Estimated Taxes with Cash

You can submit cash payments in person at certain retail partners. To do this, you must be registered online with ACI Payments, Inc. There is a transaction limit of $1,000 per day, so amounts greater than this would have to be split up over multiple days. The IRS advises against sending cash payments through the mail.

Need Help with Estimated Tax Payments?

After reading this guide, you should have a better sense of how and why you might need to make estimated tax payments as an expat. If you still have questions, we have the answers.

At Greenback Expat Tax Services, we specialize in helping Americans around the world manage their US tax obligations. We’re an American company founded in 2009 by US expats for expats, and we’ve helped over 23,000 expats file over 71,000 returns while maintaining a 4.9-star average on TrustPilot.

Many of our CPAs and Enrolled Agents are expats themselves, living in 14 time zones, and they have the knowledge and patience to help you with the complicated US tax system and your local rules. Whether you’re concerned about quarterly estimated payments, self-employment tax, or FBAR reporting requirements, we can help.

No matter how late, messy, or complex your return may be, we can help. Just contact us, and one of our customer champions will be happy to address all your concerns.

If you’re ready to be matched with a Greenback accountant, click the get started button to jump right in. You’ll have peace of mind, knowing that your taxes were done right.

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This article is provided for general informational purposes only and should not be construed as tax or legal advice. Every taxpayer’s situation is unique, and tax laws are subject to frequent changes. Please consult with a qualified tax professional before making any decisions regarding your tax obligations.