unless your chose that option, the underpayment penalty presumes all income is even through the year.
but for example, let's say you had little income for 3/4 of the year but sold stock in December for a very, very large gain. You'd want to do the quarterly approach because you had no income for the 1st three quarters and no estimated tax liability.
if you stick with annual approach in my example, the IRS assumes that stock same happened evenly over 4 quarters and therefore to avoid underpayment penalties, it would have expected you to pay the estimates each quarter.
make sense?
