Estimated tax payments if I don't know my income

[taxquestions149]

Hi,

I'm currently self-employed, but so far this year have not incurred any income. I don't know how much self-employment income I'll have this year. It could be zero, or it could be significant.  It seems like the whole idea of estimated tax payments are made for people with stable income. I, unfortunately, cannot see into the future. 

How do I make estimate tax payments, if i do not know my future income? 

I have this question both for federal taxes and for California state taxes (which are even more complicated).

Thanks in advance for your help!

[DMarkM1 · Accepted solution]

It is estimated and based on your prior year income, which is usually a pretty good indicator.   

Remember you can avoid underpayment penalties by paying an amount that is at least 100% of your prior year taxes (110% if over 150,000 AGI).    So, one method is to divide the amount of your 2020 tax bill into four installments and pay those amounts.   

Additionally, if you do not have any income in a quarter don't send in the quarterly payment.  When you file your taxes you will have the opportunity, if needed, to reduce/eliminate any penalties for underpayment if your income was unstable during the year (for example a quarter with zero or very low income). 

Also, if during the year it appears your income will significantly increase in 2021, you can send in a higher payment.  You are not stuck with the amount printed on the voucher.  It is only an estimate/guide.  Just pen/ink change the voucher amount before you send it in.  Just keep track of what you actually paid for your 2021 tax return.