Individual estimated tax question

"Dan" wrote

It doesn't sound like it. From what you say, the first payment basically covered your liability, and it was not only timely, but covered the tax liability amount for the rest of the year.

I trust you are referring to 2010, because 2009 is closed now. But yes, you can adjust the tax payment amount, up or down, to more closely match your revenue stream and the resulting tax liability.

Having equal estimated payments throughout the year helps to simplify the tax return. If for example you pay $5000 each quarter, then you can just use the short part of form 2210 to calculate your estimated tax penalty. If you owed $50000, then you were short $30000, and so you calculate interest by multiplying $30000 by a factor (which is on form 2210 itself, and is 2.66% for 2009).

On the other hand, if your income varied during the year, each quarter's estimated payment is different. It's possible you earned

70% of your income in Q4. In this case, only Q4's payment should be higher. You use the long part of form 2210. And you have to track your income and expenses for each quarter, and essentially do 4 tax returns, with the result tax for each quarter summarized on form 2210. It's very tedious, especially if you have dividends and stocks, etc.

I think the OP is referring to the last payment of the 2009 estimated taxes which is due on Jan 15 of 2010.

One other thing is that there really isn't a penalty. They charge you interest, but it isn't a big deal; not have having a past due credit card bill.