Commission checks arrive gross. The IRS still wants its share on a pay-as-you-earn basis, and for contractors the mechanism is quarterly estimated payments. For a high ticket closer, the question is not really whether you owe them, it is how to run them on an income that can double one month and halve the next.
The quarterly trigger: $1,000 of tax owed
Estimated payments become mandatory once you expect to owe $1,000 or more in federal tax for the year after withholding. Self-employment tax alone, 15.3% of net profit, gets a closer there at roughly $7,000 of annual profit, which is one decent month on most offers. Miss the payments and the IRS charges an underpayment penalty computed like interest, quarter by quarter, even if you pay the full balance at filing. The deadlines are April 15, June 15, September 15, and January 15 of the next year, and they are not evenly spaced: the second covers two months, the fourth covers four. Payments go through IRS Direct Pay or your IRS online account in minutes; the Form 1040-ES paper vouchers exist for those who mail checks.
Big month, small month: the annualized income method
The default assumption behind the four deadlines is that income arrives evenly, which describes no closer who ever lived. Launch months, seasonal offers, a switch between companies mid-year: commission income is lumpy. You have two good tools for it. The simple one is percentage-based saving: sweep a fixed cut of every payout, commonly 25% to 35%, into a tax-only account the day it lands, then pay each quarter based on what actually came in that period. The precise one is the annualized income method on Form 2210, which lets you compute each quarter's required payment from that quarter's actual income, so a dead first quarter legitimately means a small April payment, and the Q4 surge is paid in January rather than penalized backward across the year.
Safe harbor: pay last year's number and sleep
When this year is unpredictable, anchor to last year. Pay in at least 100% of your prior year's total tax, in four equal installments, and you are penalty-proof no matter how large this year's income turns out; the threshold is 110% of prior-year tax if your adjusted gross income last year exceeded $150,000. In a breakout year this is a gift: you pay quarterlies based on the smaller old number, keep the difference working for you all year, and settle the balance in April without penalty, provided you actually saved for that balance. Flip side: in a down year, blindly paying last year's number overpays, so switch to estimating 90% of the current year instead. Two final habits round out the system. Calendar all four dates with a week of margin, and remember your state: most states with an income tax expect their own estimates on a similar schedule, and their penalty math is just as automatic as the federal version.