Clients and Friends,
With the third quarter wrapping up soon and the year-end horizon in view, now is the time to make purposeful adjustments. Whether you’re managing estimated payments on variable income or preparing your business for its final push of the year, September offers a natural moment to pause and redirect.
This month, we’re looking at two practical but often-overlooked opportunities. On the individual side, we’re revisiting estimated tax payments. On the business side, we’re using the quiet weeks of early fall to help owners implement moves now that will matter in December.
The Calendar Doesn’t Wait, and Neither Should Your Planning
Small moves in September can lead to big savings by December.
INDIVIDUAL FEATURE
When Not to Pay Estimates: Advanced Planning Around Safe Harbors, Liquidity, and Investment Timing
Estimated tax payments aren’t just a compliance tool, they’re a strategic lever.
Most of our clients understand how estimated tax payments work. What’s often missed is when not paying is a smarter financial move. With the Q3 deadline approaching, now is the time to assess whether skipping or reducing a payment is not only permissible, but potentially optimal.
Here’s where we see clients making smart use of the rules:
- Leaning on Safe Harbor Provisions. If you’ve already covered 100% (or 110%) of last year’s tax liability through prior payments or W-2 withholdings, you may qualify for full penalty protection even if your 2024 income is higher.
- Delaying Q3 to Time Q4 Events. If you’re anticipating significant deductions, charitable giving, investment losses, or business expenses later in the year, it may be more efficient to skip or reduce your Q3 estimate and true-up in Q4.
- Withholding from W-2s or Retirement. Withholding is treated as evenly applied throughout the year regardless of when it happens. That means adjusting your Q4 W-2 withholding or scheduling a one-time IRA distribution with tax withheld can help offset underpayment without making a formal estimated payment.
- Annualized Income Installment Method. If your income fluctuates throughout the year (common for K-1s, founders, investors), the IRS allows an alternative calculation based on when the income was received. This is more complex but can reduce Q3 payments in favor of a more accurate Q4 settlement.
Our role is to help you optimize, not just comply. If you’re unsure whether a Q3 payment benefits your broader tax position, let’s model it together!
Further Reading Articles:
- IRS: Do You Have to Pay Estimated Tax?
- Forbes: Estimated Taxes Made Easy
- Brighton Jones: How Safe Harbor Tax Rules Impact Your Estimated Tax Payments
BUSINESS FEATURE
Q3 Wrap-Up: Tax Moves Before Year-End
The best planning happens before the fourth quarter begins
As summer ends, it becomes easier to see December from here. If you’re a business owner, that means now is your best opportunity to lock in proactive moves before the year closes. What you do in September can impact everything from cash flow to tax exposure to bonus planning.
Here’s where to focus:
- Asset Purchases – If you’re planning to invest in equipment, tech, or other depreciable assets, placing them in service before December 31 could open the door to accelerated write-offs via Section 179 or bonus depreciation.
- Owner Compensation – Now is the time to review S Corporation salaries, guaranteed payments, and shareholder distributions. Are they reasonable? Are they documented? Are they optimized?
- Bonuses and Profit Sharing – Want to deduct bonuses this year? Plan now. Delayed decisions may disqualify the deduction or create compliance risks.
- Quarterly Reconciliation – How are your Q1–Q3 actuals lining up with projections? Are your estimated payments in line with real profits?
- Employee Benefits Planning – If you’re considering fringe benefits, health reimbursement arrangements (HRAs), or retirement contributions, laying the groundwork now gives you more control later.
Too many business owners try to do all of this in December. We recommend handling what you can now while there’s still room to maneuver.
Additional Reading Links:
- IRS: Section 179 Deduction Basics
- End-of-Year Tax Moves Small Business Owners Can Make in Q3
- Tax Advisor: Advising S Corporation Clients on Reasonable Compensation
PLANNING TIP OF THE MONTH
Use Q3 reports to spot your most expensive habits.
Now that three quarters are about to be behind you, it’s a perfect time to pull reports – not just to check revenue, but to spot what’s quietly costing you. Recurring vendor creep, unused software, overfunded accounts, or auto-renewing contracts can drain cash without notice. A 30-minute review now could save thousands before year-end.
Coming Next Month
We’ll be covering:
- Roth Conversions and Tax Bracket Management (Individual)
- Year-End Fringe Benefit Bonuses (Business)
Thank you for taking the time to stay informed. If you have questions about anything we’ve covered or if you’re ready to take a deeper look at your tax positioning ahead of year-end, we’re here to help.
The Aiken Warner Team
