AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
If Nigerian clients pay you in bursts, the IRS annualised income installment method (Schedule AI on Form 2210) lets you base each estimated payment on income received up to that point, so a quiet first quarter needs a small payment and a big August needs a larger September one. If you use it for one due date you must use it for all, and you attach Form 2210 with Schedule AI to your return.
The basic rule
The IRS says individuals, including sole proprietors, generally must pay estimated tax if they expect to owe $1,000 or more when they file (page reviewed 25 September 2026). Freelancers have no employer withholding, so estimated payments cover income tax and self-employment tax through the year.
The standard approach assumes income arrives evenly and asks for four equal instalments. You avoid the underpayment penalty if you pay the smaller of 90% of this year's tax or 100% of last year's, or 110% of last year's if your prior-year AGI was over $150,000 ($75,000 married filing separately), per the 2025 Form 2210 instructions.
Why Nigerian income breaks the even pattern
- Large clients often pay on project completion or after a budget release, not monthly.
- Year-end and budget-approval cycles bunch payments into particular months.
- Exchange controls or delays at the client's bank can push a payment into the next quarter.
- Withholding tax deductions make the amount received differ from the invoice.
Under the equal-instalment method, a freelancer paid mostly in the second half of the year can owe a penalty for the first quarters, even though there was little income then to pay tax on.
How the annualised method works
Schedule AI measures your income over four cumulative periods and works out the instalment due for each based on what you earned so far. The 2025 instructions list the periods as:
| Period | Income counted | Instalment due (2025 tax year) |
|---|---|---|
| 1 | 1 January to 31 March | 15 April 2025 |
| 2 | 1 January to 31 May | 15 June 2025 |
| 3 | 1 January to 31 August | 15 September 2025 |
| 4 | The whole year | 15 January 2026 |
For the 2026 tax year the pattern is the same, but check the dates in the current Form 1040-ES or Publication 505; the IRS moves a date that falls on a weekend or holiday to the next business day.
Worked example (illustrative, no tax computed)
A consultant receives nothing from January to March, $6,000 in May, $30,000 in August after a Lagos client releases its budget, and $12,000 in November. Under even instalments, a quarter of the expected annual tax was due in April, when nothing had been earned. Under Schedule AI, the first instalment is based on zero income, the second on $6,000, the third on $36,000 and the fourth on the year's $48,000. The larger payments fall after the money arrived.
Rules to follow if you use it
- Use it for every due date in the year, not just the ones that help; the instructions say so.
- Check box C in Part II of Form 2210 and attach Form 2210 with Parts I to III and Schedule AI to your return.
- Keep records of the date each payment arrived and its dollar value on that date. Naira receipts are converted when received.
- Pay on time for each period on the income you actually had; the method does not excuse late payments.
Our guide to converting naira invoices for Schedule C covers the rate to use, and estimated taxes for freelancers with Nigerian clients covers the basics.
Self-employment tax is part of the bill
Your estimated payments need to cover self-employment tax as well as income tax. Freelancers who budget only for income tax are often surprised by the total. Include it when you set aside money from each Nigerian payment, and remember that naira received is converted to dollars on the day it arrives, so a weaker naira lowers both your income and the tax on it.
Payments that cross a period end
Annualisation counts income when you receive it as a cash-method taxpayer, not when you invoice. A Lagos client that approves your invoice on 28 August but whose bank sends the money on 2 September has paid in the fourth period, not the third. Keep the bank's credit date, not the invoice date, in your income log. If withholding tax was deducted, record the gross fee and the amount withheld separately; the foreign tax credit question is covered in claiming Nigerian WHT as a foreign tax credit.
Simpler alternatives
If last year's income was similar, paying 100% (or 110%) of last year's tax in four equal parts is a safe harbour and needs no Schedule AI. The IRS also says you can pay weekly, biweekly or monthly, as long as enough is paid by the end of each period. Many freelancers set aside a fixed share of every receipt in a separate account and pay from it.
Where Pryme fits
Keeping Nigerian receipts in one Pryme Business Account, with dated statements, makes the "when did it arrive" question easy to answer. The Finance agent can prepare a running total of income by period for you to review.
Questions people ask
What is the annualized income installment method?
A way to calculate estimated tax instalments on income received up to each period end, using Schedule AI on Form 2210, so uneven income leads to uneven payments.
Do I have to use it for all four quarters?
Yes. The Form 2210 instructions say that if you use it for one due date, you must use it for all.
When are estimated tax payments due?
For 2025 the instructions list 15 April, 15 June and 15 September 2025 and 15 January 2026. Check Form 1040-ES for the 2026 dates.
How do I avoid the penalty with irregular income?
Pay the smaller of 90% of this year's tax or 100% (110% above $150,000 AGI) of last year's, or use the annualised method to match payments to income.
Sources
- IRS: Estimated taxes (reviewed 25 Sep 2026) · accessed Oct 2026
- IRS Instructions for Form 2210 (2025), reviewed 30 Apr 2026 · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.