A locum CRNA finishes a busy run of shifts, opens the business account and sees a very healthy balance. For about twelve seconds, it feels like all of that money belongs to them.
Then the estimated-tax deadline shows up.
This is the mental trick a 1099 income stream likes to play. The tax reserve sits beside operating cash, so it starts to look available. It is not leftover business cash, an emergency fund or dry powder for whatever stock the internet has decided cannot lose.
It already has an owner and a due date. The IRS has never accepted “the market was down that week” as a payment arrangement.
A tax reserve for 1099 CRNAs is a very short-term investment portfolio with a non-negotiable liquidity date.
It is a very short-term portfolio with three jobs:
- Preserve the amount owed.
- Be available before the payment deadline.
- Earn a reasonable return without interfering with the first two jobs.
In that order.
The IRS has its own definition of “quarterly”
Federal estimated-tax periods are not four equal three-month quarters. The second “quarter” covers only April and May. The fourth covers four months. This is one of those systems that makes more sense once you stop expecting it to make sense.
The official due dates come from the 2026 Form 1040-ES package. The other dates below are the internal dates I would actually use. They are not IRS deadlines. They give you enough room to update the projection, move the money and confirm the payment without turning September 15 into an unnecessary fire drill.
| Income period | Update projection | Move to checking | Submit payment | IRS due date |
|---|---|---|---|---|
| January 1 to March 31 | April 1, 2026 | April 8, 2026 | April 13, 2026 | April 15, 2026 |
| April 1 to May 31 | June 1, 2026 | June 8, 2026 | June 11, 2026 | June 15, 2026 |
| June 1 to August 31 | August 31, 2026 | September 8, 2026 | September 11, 2026 | September 15, 2026 |
| September 1 to December 31 | December 31, 2026 | January 8, 2027 | January 13, 2027 | January 15, 2027 |
The IRS permits weekly, biweekly or monthly payments. You do not get extra credit for using the four-payment schedule. What matters is having enough paid by each applicable deadline.
Safe harbor is a seatbelt, not the destination
Most taxpayers can generally avoid the federal underpayment penalty by paying the smaller of:
- 90% of the current year’s tax, or
- 100% of the prior year’s tax
The prior-year percentage increases to 110% when prior-year adjusted gross income exceeded $150,000, or $75,000 for married filing separately. The prior-year return generally must cover a full 12 months.
You generally enter estimated-tax territory when you expect to owe at least $1,000 after withholding and refundable credits. The IRS estimated-tax FAQ explains those thresholds.
The key word is penalty. Safe harbor answers how much you generally need to prepay to avoid an underpayment penalty. It does not answer how much tax you will ultimately owe.
Safe harbor only protects against an underpayment penalty. It does not promise that the remaining April tax bill will be pleasant.
Assume a CRNA had:
- 2025 total tax of $72,000
- 2025 AGI of $250,000
- Projected 2026 total tax of $96,000
- Projected 2026 W-2 withholding of $24,000
The prior-year safe harbor is:
$72,000 × 110% = $79,200
The current-year safe harbor is:
$96,000 × 90% = $86,400
The smaller target is $79,200. After $24,000 of projected withholding, the regular estimated-tax target is $55,200, or $13,800 per installment if paid evenly.
But the actual projected 2026 tax is still $96,000. After $24,000 of withholding and $55,200 of estimates, the projected filing balance is $16,800.
No penalty does not mean no balance due. In this example, meeting safe harbor still leaves a $16,800 check to write with the return.
You do not need to run the full calculation every Friday. I would update it when income changes materially, when payroll changes, and before each internal planning date on the calendar above.
Check the federal safe-harbor target
Enter tax figures, not gross 1099 revenue. This is a planning check that compares the regular prior-year and current-year methods, subtracts expected withholding and credits, and shows the cumulative amount needed by the next standard deadline.
The 110% prior-year rule applies because the entered 2025 AGI exceeds $150,000.
Planning estimate only. This uses regular equal installments and assumes annual withholding and credits are available evenly for planning purposes. It does not calculate the annualized-income method, state taxes, special farmer or fisher rules, a late-payment penalty, every credit adjustment, or whether prior payments were timely. Use Form 1040-ES, Publication 505 and your tax professional for the filing calculation.
Your hospital paycheck can help with the timing
A CRNA with hospital wages and 1099 income has another lever that a full-time independent contractor does not: additional W-2 withholding.
Federal withholding is generally treated as paid evenly throughout the year for estimated-tax penalty purposes, even if more of it was withheld later. A late estimated payment does not receive the same blanket treatment.
That can make additional hospital or S-corporation payroll withholding useful when a projection changes late in the year. Coordinate it with payroll and the tax projection. Randomly emptying the final paycheck into federal withholding is technically a strategy, in the same way panic is technically a planning style.
If income arrives unevenly, the annualized income installment method may also reduce the required earlier payments. That calculation is handled on Form 2210, Schedule AI and is discussed in IRS Publication 505.
Where I would keep the reserve
The right answer depends mostly on when the money is needed. For most independent CRNAs, this does not need to become a miniature hedge fund. A separate high-yield savings account is a perfectly good default, then we can add complexity only when the balance and timing justify it.
| Option | Protection | Typical access | Tax treatment | Best use | Main risk |
|---|---|---|---|---|---|
| Business checking | FDIC if held at an insured bank and within limits | Immediate | Interest, if any, generally federally and state taxable | Payment buffer | Very low yield |
| Business HYSA | FDIC if properly held at an insured bank and within limits | Same day to several business days | Interest generally federally and state taxable | Core reserve | Transfer limits, holds or delays |
| Government money-market mutual fund | Not FDIC insured; SIPC may protect missing brokerage assets, not market losses | Generally redeemable on a business day, plus transfer time | Federal taxable; state exemption may apply only to qualifying Treasury holdings | Brokerage-based core reserve | Variable yield, small principal risk and settlement logistics |
| Broker cash sweep | Depends on whether cash goes to a bank, money-market fund or free credit balance | Usually convenient | Depends on sweep destination | Operational convenience | Default yield may be poor and protection is easy to misunderstand |
| Treasury-bill ladder | Direct U.S. Treasury obligation; not an FDIC deposit | Full face value at maturity; market value can move before maturity | Federal taxable, exempt from state and local income tax | Known future deadlines | Maturity mismatch or selling early |
Business checking: boring on purpose
Checking wins on availability and loses on yield.
I would keep the next payment and a small operating cushion in checking once the deadline is close. There is no trophy for earning another $47 if an ACH transfer is still pending on September 15.
FDIC insurance generally covers $250,000 per depositor, per insured bank, per ownership category.
An LLC or corporation engaged in an independent business generally receives its own business ownership category. A sole proprietorship does not. Sole-proprietor deposits are generally combined with the owner’s other single-owner deposits at the same bank.
A separate EIN does not manufacture separate FDIC insurance for a sole proprietorship.
The FDIC’s deposit-insurance glossary and estimator explains the ownership categories.
Business high-yield savings: the default answer
For most 1099 CRNAs, a separate business HYSA is the best default home for the core tax reserve. It creates a clean visual boundary between money available to run the business and money waiting for the government.
It is easy to understand, normally FDIC-insured within the applicable limits and separate from operating cash. The yield will change, but the account itself does not require managing maturities or placing trades.
Before using one, verify:
- The actual FDIC-insured bank holding the deposit
- How the account is titled
- Daily and monthly transfer limits
- ACH hold periods
- Whether outbound transfers can be initiated from the receiving bank
- Whether a newly linked account triggers a security delay
The return matters. The plumbing matters more.
Government money-market funds: useful, but not a bank account
A government money-market fund can be a strong option when the tax reserve already sits at a brokerage firm. Just make sure you know what you own before referring to the entire account as “cash.”
Money-market funds invest in short-term debt, cash and cash equivalents. Government funds generally hold government securities, cash and qualifying repurchase agreements. They seek to maintain a stable $1 share price, but they are mutual funds, not bank deposits.
They are not FDIC-insured, and it is possible to lose money.
SIPC protection is also frequently misunderstood. SIPC can help restore missing cash or securities when a member brokerage fails. It does not protect against a decline in the fund’s value.
The SEC’s money-market fund bulletin and SIPC protection bulletin explain the distinction.
State taxation requires another check. A government money-market fund is not necessarily a Treasury-only fund. The state-tax exemption generally depends on the percentage of income attributable to qualifying direct U.S. government obligations and the taxpayer’s state rules. Use the fund company’s year-end tax supplement rather than assuming 100% of the dividend is state-exempt.
Broker cash sweeps: read the fine print
A brokerage sweep is a process, not one specific product. Two accounts can both show “cash” on the screen while paying different rates and carrying different protections underneath.
Uninvested cash might be swept to one or more FDIC-insured banks, invested in a money-market mutual fund, or left as a free credit balance at the broker. Those choices can have very different yields and protections.
A bank sweep may have FDIC coverage at each program bank, subject to the ownership limits and any other deposits you already hold at the same banks. A money-market sweep is a security and is not FDIC-insured. A free credit balance may pay little or no interest.
FINRA warns that the yield difference between cash programs can be substantial. Its guide to managing brokerage cash is worth reading before assuming the default sweep is competitive.
Look at the actual destination, rate, program-bank list and withdrawal process. “Cash” is not a complete investment description.
Treasury bills: match the maturity to the deadline
Treasury bills are issued with maturities ranging from four to 52 weeks. Current regular terms include 4, 6, 8, 13, 17, 26 and 52 weeks.
They are sold at a discount or at face value. At maturity, Treasury pays face value. The difference is the interest.
Treasury interest is subject to federal income tax but exempt from state and local income tax. The TreasuryDirect bill guide provides the current terms and auction schedule.
A bill ladder works well when:
- The reserve is consistently large enough to justify the setup
- The payment amount is reasonably predictable
- Each bill matures before the tax deadline
- A separate liquid cushion remains available
I would target maturity at least five business days before the payment date. If a bill must be sold early, its market value can be higher or lower than the amount paid. A deadline-matched bill should be held to maturity whenever possible. The bill should adapt to the tax calendar, not the other way around.
My preferred three-bucket setup
For most independent CRNAs, I would use three layers.
Payment cash
Keep amounts needed within the next ten business days in checking.
Core reserve
Keep the next estimated payment in a business HYSA or a government money-market fund with a tested transfer process.
Known future obligations
Consider short Treasury bills for predictable amounts not needed until a later deadline. Match each maturity to the calendar and leave a transfer cushion.
The larger and more predictable the reserve, the more useful a Treasury ladder becomes. For a smaller balance, simplicity usually wins. Not every dollar needs an optimized assignment.
Suppose a CRNA has $60,000 reserved for 75 days. Chasing an additional 0.75% annual yield produces approximately:
$60,000 × 0.75% × 75 ÷ 365 = $92.47
That is before tax.
If capturing the extra $92 requires another account, a manual trade, two transfer steps and an anxious phone call to customer service, I would pass.
Do not call a personal tax payment a business expense
Federal and state individual estimated taxes are personal obligations. They are not deductible business expenses.
A sole proprietor may keep the reserve in a business account for organization, but the payment is still personal for tax purposes.
For an S corporation, a payment of the shareholder’s personal estimate from the corporate account generally needs to be recorded as a shareholder distribution, not a tax expense. The cleaner workflow is usually to transfer the amount to a separately titled personal tax account, record the distribution and pay from there.
The reserve account should make the books cleaner, not create a mystery transaction for the tax preparer. Our guide to owner draws, salary and distributions explains why the label matters.
The state wants its own bucket
Federal safe harbor does not satisfy a state estimated-tax obligation.
Michigan generally requires estimated payments when expected individual income-tax liability after credits and withholding is $500 or more. Michigan follows the same general 90%, 100% and higher-income 110% framework.
Other states can have different thresholds, rates, annualization rules and payment portals. A locum CRNA working in several states may need separate reserve targets and deadlines for each jurisdiction. In other words, the federal reserve is not the whole reserve. Our multi-state compliance guide for CRNAs covers the larger recordkeeping problem.
Michigan’s current rules are summarized by the Michigan Department of Treasury.
Build the system before chasing the yield
A good tax-reserve system should answer five questions at any time:
- How much is reserved?
- What is the next federal payment?
- What is the next state payment?
- Where is each dollar held?
- How many business days will it take to reach the payment account?
Once those answers are clear, compare yields.
The tax reserve is an investment portfolio, but it is a portfolio with a very impatient beneficiary. The goal is not to squeeze every possible basis point out of it.
When the business account looks unusually healthy after a long run of locum shifts, remember where we started. Some of that money is only visiting.
Give it a separate home, a clear deadline and enough time to arrive before the IRS starts charging rent.
This article and calculator provide general educational information only. They are not individualized tax, legal, banking or investment advice. Deposit-insurance coverage, account terms, fund holdings, tax treatment and estimated-tax requirements depend on the taxpayer and institution. Confirm payment amounts and deadlines with your tax professional.