Estimated Tax Penalty Calculator

About this calculator

In the US, taxpayers who don't pay enough tax throughout the year — through withholding or quarterly estimated payments — can owe an underpayment penalty, calculated by the IRS on Form 2210. The penalty is essentially interest charged on the shortfall for each period it remained unpaid.

A simplified version of that calculation is underpayment amount × the IRS's quarterly-adjusted annual interest rate (tied to the federal short-term rate plus 3 points, and updated quarterly), prorated over the exact number of days the underpayment remained outstanding, divided by 365.

Freelancers, gig workers, and anyone with significant income outside of standard payroll withholding use estimates like this one to gauge whether their quarterly payments are on track and roughly how much a shortfall might cost in penalties, though the IRS's actual Form 2210 calculation can be more granular period by period.