Should I pay estimated quarterly taxes based on just that quarter's income or my projected annual earnings?

You can definitely base your estimated tax payments on your projected annual income rather than paying strictly based on each quarter's earnings. The IRS actually provides different methods for calculating your estimated payments. The safest approach is to use the "safe harbor" rule, which means you'll avoid penalties if you pay either 100% of last year's tax liability (or 110% if your AGI was over $150,000) or 90% of your current year's tax liability, whichever is smaller. This amount can be paid in four equal installments throughout the year. However, if your income is irregular like you're describing, you might benefit from using the "annualized income installment method" using Form 2210. This method lets you calculate each quarterly payment based on your actual income for that period, which means you pay more when you earn more and less when you earn less.

When I had a similar situation with my consulting income being super uneven, I found taxr.ai (https://taxr.ai) to be really helpful for figuring out my quarterly payments. It basically analyzed my income patterns and helped me avoid overpaying in high-earning quarters while still staying compliant. I was stressed about how to handle my estimated taxes since my Q2 was like 3x higher than all my other quarters combined, and the regular calculation methods would have had me paying way too much all at once. The tool helped me properly use the annualized income method, which I didn't even know existed before.

Just wanted to say I tried taxr.ai after seeing it mentioned here and it was exactly what I needed for my seasonal photography business! I was always either overpaying or underpaying my quarterly taxes because of my summer-heavy income. The tool helped me properly calculate using the annualized method and showed me that I was eligible for some deductions I had been missing. Wish I'd known about this years ago instead of always stressing about quarterly payments!

If you're still confused about your quarterly estimates after trying to calculate them, just call the IRS directly! I know it sounds crazy but I used https://claimyr.com and got through to an actual IRS agent in like 20 minutes instead of waiting on hold for hours. You can see how it works here: https://youtu.be/_kiP6q8DX5c I was super confused about how to handle my quarterly payments when I had a big payout in one quarter, and the agent walked me through exactly how to calculate it properly using the annualized income method. They even sent me the worksheet I needed.

Well I stand corrected! After being completely skeptical about Claimyr, I actually tried it last week when I needed clarification on my estimated payments. Not only did I get through to the IRS, but I got connected to someone in their self-employment tax department who actually knew what they were talking about! They explained that for my situation (I'm a real estate agent with very uneven income), I should absolutely be using the annualized income method instead of making equal payments. They even emailed me the worksheet I needed to track my calculations throughout the year. I'm honestly shocked that this worked so well after years of frustration trying to get help from the IRS.

Here's the simple way I handle my uneven income (freelance writer): I just take my previous year's total tax and divide by 4. Pay that amount each quarter. As long as you pay 100% of last year's tax (or 110% if your income was over $150K), you're safe from any penalties. It's called the safe harbor rule. Much easier than trying to calculate actual quarterly income.

Don't forget that the due dates for quarterly estimated payments are NOT actually at the end of each quarter! The weird schedule is: Q1 (Jan-Mar): Due April 15 Q2 (Apr-Jun): Due June 15 (not July 15!) Q3 (Jul-Sep): Due Sept 15 Q4 (Oct-Dec): Due Jan 15 of next year I got hit with penalties because I didn't realize Q2 was due in June, not July. Such a stupid system.

Something no one mentioned - if you're married and your spouse has a W-2 job with withholding, you can sometimes avoid quarterly payments entirely by increasing their withholding to cover your self-employment tax too. My husband just fills out a new W-4 with his employer asking for additional withholding each paycheck. Way easier than dealing with quarterly payments!

Great question! You're absolutely right to think about this strategically. The key thing to understand is that estimated quarterly payments are based on your projected annual income, not just that specific quarter's earnings. You have a few options: 1. **Safe Harbor Method**: Pay 100% of last year's total tax liability (or 110% if your AGI was over $150k) divided into 4 equal payments. This completely avoids penalties regardless of when you earn the money during the year. 2. **Annualized Income Method**: This is perfect for your situation! You calculate each quarterly payment based on your actual year-to-date income at that point. So for Q2, you'd base it on your total Q1+Q2 income, Q3 on Q1+Q2+Q3, etc. This prevents you from overpaying early in the year when you had that great quarter. 3. **90% of Current Year**: Pay 90% of what you expect to owe for the entire current year, divided into 4 payments. Given your income pattern (strong Q1, expecting slower Q2-Q4), the annualized income method using Form 2210 is probably your best bet. It lets you pay more when you earn more and less when you earn less, which matches your actual cash flow. The IRS cares about avoiding underpayment for the full year, not matching each quarter's payment to that quarter's specific earnings.