Estimated Tax Payment

Katelynn Minott, CPA & CEO July 11th, 2026

An estimated tax payment is a payment made to the IRS during the year for tax that is not fully covered by withholding. U.S. expats may need to make estimated tax payments if they earn self-employment income, investment income, rental income, pension income, or other income without enough U.S. tax withheld.

Why it matters for U.S. expats

U.S. tax is a pay-as-you-go system, so filing from abroad does not mean waiting until the annual return is due to pay. Expats who owe U.S. tax after the Foreign Tax Credit, Foreign Earned Income Exclusion, withholding, and other credits may need to make estimated payments during the year to avoid underpayment penalties.

Common questions

1. Do U.S. expats need to make estimated tax payments?

Yes, if they expect to owe at least $1,000 in U.S. tax after subtracting withholding and credits. This is common for self-employed expats, business owners, investors, landlords, and taxpayers with uneven income.

2. What income can create estimated tax payment requirements for expats?

Self-employment income, consulting income, foreign rental income, dividends, interest, capital gains, pension income, and business income can all create estimated tax payment requirements if not enough tax is withheld.

3. When are estimated tax payments due?

Estimated tax payments are usually due April 15, June 15, September 15, and January 15 of the following year. If a deadline falls on a weekend or legal holiday, the payment is due the next business day.

4. Does the expat June 15 filing extension change estimated tax deadlines?

No. The automatic June 15 filing extension for taxpayers abroad does not change the estimated tax payment schedule.

5. How do U.S. expats calculate estimated tax payments?

Expats estimate expected income, deductions, credits, Foreign Tax Credit, Foreign Earned Income Exclusion, self-employment tax, and withholding for the year. Form 1040-ES includes worksheets for calculating the payment amount.

6. Can the Foreign Tax Credit reduce estimated tax payments?

Yes. If foreign income tax is expected to reduce U.S. tax, it can be included in the estimate. The calculation needs to be realistic because an overestimated Foreign Tax Credit can still lead to an underpayment penalty.

7. Can the Foreign Earned Income Exclusion reduce estimated tax payments?

Yes. Qualifying expats can include the Foreign Earned Income Exclusion in their estimated tax calculation. Income above the exclusion, self-employment tax, and non-earned income may still create U.S. tax.

8. Do self-employed U.S. expats need estimated tax payments?

Yes, if they expect to owe U.S. tax after credits and exclusions. Estimated payments may need to cover both income tax and self-employment tax.

9. What happens if estimated tax payments are too low?

The IRS can charge an underpayment penalty, even if the taxpayer receives a refund when the annual return is filed.

10. Can U.S. expats avoid the underpayment penalty?

Yes, if they meet a safe harbor. Many taxpayers avoid the penalty by paying enough through withholding and estimated payments to cover either 90% of the current year’s tax or 100% of the prior year’s tax, with special rules for higher-income taxpayers.

When to get help

Professional guidance is important when:

You are self-employed or run a business from abroad.
You have investment, rental, pension, or capital gains income.
Your income changes significantly during the year.
You pay foreign tax and want to use the Foreign Tax Credit in your estimate.
You claim the Foreign Earned Income Exclusion and still owe U.S. tax.
You received an IRS underpayment penalty notice.
You need to coordinate U.S. federal, state, and foreign estimated payments.

Bright!Tax can calculate estimated tax payments, factor in expat credits and exclusions, and help prevent underpayment penalties. Get started with Bright!Tax.

Self-employment taxes for Americans abroad

Official sources

Reviewed by

Katelynn Minott, CPA & CEO

Last reviewed

July 2026