Here is the source authority: [
www.irs.gov] I will quote from the IRS website, "If you didn't pay enough tax throughout the year, either through withholding or by making estimated tax payments, you may have to pay a penalty for underpayment of estimated tax. Generally, most taxpayers will avoid this penalty if they either owe less than $1,000 in tax after subtracting their withholding and refundable credits, or if they paid withholding and estimated tax of at least 90% of the tax for the current year or 100% of the tax shown on the return for the prior year, whichever is smaller."
Since my income varies throughout the year, I calculate what I seem to owe at the end of each quarter and decide if at the end of the year I will owe more than $1000. I have a pension, Social Security, regular wages, and independent contractor income, so it gets complicated.
Shopping Southeast Pennsylvania, Delaware above the canal, and South Jersey since 2008