IRS requires you to establish your Required Annual Payment for the year and pay as you go.
You can base your estimate on prior year's tax , or 90% of this year's tax, whichever is smaller.
Each period your withholding and estimated tax paid must be at least 25% of the estimate, even if your income is uneven. [Otherwise, you will be penalized.] this is the simplified method, default.
Payments above 25% are carried into the next period.
if your estimate is based on this year's tax and turns out to be wrong you may be penalized.
you can compensate by overestimating.
if your estimate is based on prior year's tax, you know that when you file by April 15, which is also the first estimated tax payment due date. How convenient.
The first two estimated payment dates have passed so if nothing has been done you may be penalized under the simplified rule.
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For the other more complicated rule, see Form 2210 Schedule AI.
