My income is part salary and part stock grants whose value is unpredictable. So, I use estimated payments with annualized income method. For the sake of argument, suppose that the employer withholds $5,000 each month and I owe another $3,000 for the stocks. For the first quarter it's easy, I pay $9,000 estimated tax. But for the second quarter IRS seems to want 6 months worth of tax against 5 months of withholding, so I need to pay $14,000 to avoid the underpayment penalty. This sounds super weird, but it seems to match the instructions. Am I missing something?
Now, what prevents me to ignore all that and make just one giant estimated payment on Jan 15? It is not hard to make sure it is over 90% I owe, so no underpaymen penalty. Is there a catch?
