There will be no federal penalties for not paying in enough taxes during the year if withholding
1) and timely estimated tax payments equal or exceed 90% of your 2023 tax or
2) and timely estimated tax payments equal or exceed 100% of your 2022 tax (110% if your 2022 adjusted gross income was more than $150K) or
3) the balance due after subtracting taxes withheld from 90% of your 2023 tax is less than $1,000 or
4) your total taxes are less than $1,000
the lower of 1 or 2 is your required annual income tax payment. 1 is difficult to know until the year-end so generally option 2 is the safer option. Under the simplified method 25% of the estimated taxes must be paid in each period by 4/18, 6/15, 9/15 and 1/15/24. Unless you can show otherwise 25% of your annual withholding is assumed to occur in each period.
failing this and being subject to penalties you can use the annualized installment income method.
this method requires knowing your income and deductions through 3/31, then 5/31, then 8/31, and finally year end which should be the same as the tax return. the income is annualized. taxes are computed on the annualized income and then de-annualized. your tax payments for each period must equal or exceed these amounts to avoid penalties. Estimates are treated as being paid on the date THE USPS postmarks them an office machine postmark is treated as being paid when the IRS gets it. A 4th-period payment won't help with any penalties for the first 3 periods but the sooner the 4th-period estimate is paid the lower any penalties for te 4th period.
if you can increase withholding to meet any exception then paying the estimates is not required.
