Do I need to pay estimated quarterly tax payments?

[mnsportsgeek]

My wife is getting a substantial payout from work due to the sale of the company. The tricky part is that only half of the payout is going to be taxed up front through payroll. As a result, the tax we owe is going to be significantly higher in 2021 but our tax withholding will not be high enough cover what we will owe.

I know for a fact that we will owe money on our tax return in 2021, so my question is do we have to make estimated tax payments?

Based on my research, if our AGI is over 150,000 and our tax withholding is at least 110% of our tax owed in 2020 then we do NOT need to make estimated payments. Since half of the payout will be taxed, our tax withholding will be at least 110% of our 2020 tax owed.

Does this mean I am correct in understanding that we do not need to make estimated tax payments and can simply pay the full balance off when we file next year?

[Bsch4477]

Sounds right. See a discussion of this issue here. 

https://turbotax.intuit.com/tax-tips/small-business-taxes/estimated-taxes-how-to-determine-what-to-p...

[Mike9241]

do you have a state income tax? its rules can be different.