It depends. The options and reasoning are:
- The estimates to pay 90% of this year's tax
- 100% of your 2025 tax unless your AGI exceeds the income limit of $150,000, which requires 110%. Since your income may fluctuate through the year, making payments based on 2025 might be a safer option.
- Failure to meet one of the above opens you to underpayment penalty, even with a refund.
The IRS believes taxes should be paid when income is earned. For example: If you decide to sell stock for a big gain in one quarter, the estimates should be increased that quarter to match.
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