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How to avoid estimated tax penalties?

In general, you must pay estimated tax when:

  • you expect to owe at least $1,000 in tax after your withholding and refundable credits, and.
  • you expect your withholding and refundable credits to be less than the smaller of (1) 90% of the tax to be shown your tax return, or (2) 100% of the tax shown on the previous year's tax return.