To avoid a penalty, you need to make estimated tax payments if you expect to owe $1,000 or more in taxes for the year. The tricky part is estimating income and tax liability before the income is earned, especially for self-employed taxpayers.
If you pay 100% of last year's tax liability (line 16 of your 2019 1040), you can avoid penalties. Simply take the amount from your return, divide by four, and make four equal payments.
However, if your adjusted gross income (AGI) was greater than $150,000, that estimate must be 110% of last year's tax liability.
You can also pay 90% of this year's tax liability to avoid penalties. This is more difficult to estimate, as you need to determine what that amount will be.
Both of the links below provide useful resources on calculating your estimated tax payments.
Estimated Tax Payments
IRS Estimated Taxes
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