This tool provides rough installment estimates for planning purposes only. It is not a tax return, not legal or financial advice, and not a substitute for a qualified tax professional. Tax rules change annually. Your actual installment amounts depend on your prior year tax liability and your tax authority's specific calculation method.
Installment thresholds, calculation methods and due dates vary significantly by country. Some countries calculate installments based on prior year tax, not current year income. Always verify exact amounts with your tax authority or a qualified accountant before making payments.
Full installment calculations for 5 countries. Select Other for guidance and official links.
Select your country and enter your prior year tax to calculate your installment payment schedule.
In Canada, installments are required when your net tax owing exceeds $3,000 (or $1,800 in Quebec) for the current year and either of the two prior years. In the USA, estimated tax is required when you expect to owe at least $1,000 in federal tax. In the UK, Payments on Account are required when your Self Assessment tax bill exceeds £1,000. In Australia, PAYG Instalments are required when your instalment income exceeds $4,000. In New Zealand, provisional tax applies when your residual income tax exceeds $5,000. First year self-employed individuals may be exempt until their first filing confirms a liability.
Underpaying installments results in interest charges on the shortfall, not a penalty in most countries. However, this interest is non-deductible — you cannot write it off as a business expense. In the USA, the underpayment interest rate is typically the federal short-term rate plus 3%. In Canada, CRA charges compound daily interest. The safest approach is to overpay slightly (especially in your first year) and receive the excess as a refund when you file.
Most countries offer multiple methods. Canada has three: the no-calculation method (pay what CRA tells you based on prior year), the prior year method (pay prior year tax in 4 equal parts), and the current year method (estimate current year tax and pay 25% each quarter). The USA allows the 100% of prior year tax safe harbour, 90% of current year tax, or annualized income installment method. Using the prior year method is safest when your income is growing; the current year method reduces payments if income dropped.
In Canada and the USA, yes — you can switch to the current year method at any quarter if your income changed significantly. The safe harbour is that you will not be penalised as long as you paid at least 100% of the prior year liability (110% if US adjusted gross income exceeded $150,000). In the UK, you can apply to reduce your Payment on Account by contacting HMRC if you expect this year's liability to be lower. In Australia and NZ, you can also vary your installments by notifying your tax authority.
Yes — installment payments are credits against your final tax bill when you file. If your installments were more than your actual tax liability, you receive a refund. If they were less, you pay the balance plus interest on the shortfall. Keep records of every installment payment you make — your tax authority should apply them automatically, but you should verify this when you file.
First year self-employed individuals are typically not required to make installments because the liability threshold test (current year AND prior year) has not been met. However, you will still owe all taxes when you file. The surprise of a large first-year bill is one of the most common cash flow shocks for new freelancers. Even in year one, set aside the correct percentage of every payment you receive — just hold it in savings rather than paying installments.