First, settlements for personal injury are not taxable, including pain and suffering from personal injury. Settlements for lost wages are taxable as if they were regular wages. Settlements for damaged property usually are not taxable, but may be taxable if the property was depreciated in the course of business or if the settlement was for more than you paid for the property. Settlements for pain and suffering not caused by physical injury, and for punitive damages, are taxable.
If you have a large lump sum of income in the final quarter of the year (Sept 1-Dec 31), an estimated tax payment is due by January 15, or January 31 if you file your tax return by January 31 and pay your taxes in full. The underpayment penalty is about 1% per month of the amount underpaid (0.5% penalty and 0.3% or so of interest).
If you are sure the entire settlement is taxable, then paying about 20-25% as an estimated payment should cover it (or 15% if you are in the 15% bracket and the settlement is not large enough to bump you to a higher bracket). You take credit on your tax return for the estimated tax you paid and if you overpaid, you get the difference back as part of your refund. You can make an estimated payment here,
www.irs.gov/payments
