By default your income is treated as having been received uniformly throughout the year, so an estimated tax payment made near the end of the year will not cover the portion of your income that is treated as having been received in an earlier quarter. To avoid having a large amount of income received near the end of the year has having been received earlier in the year you must perform the onerous task of annualizing income on Schedule AI of Form 2210. That way you'll reduce or eliminate underpayment penalties for the earlier quarters of the year. Annualizing involves manually dividing up all of your income, deductions, tax payments and credits among the four tax quarters.
