Now that you know whether you need to make estimated tax payments, now let’s move on to how much to pay. We’ve already said you can use last year’s income tax return to figure out how much estimated taxes to pay during the current year. You just take the amount and divide by four, and pay every three months.
But what happens if your income suddenly drops or rises during the current year? If you are making estimated tax payments based on last year’s income then you could end up over or underpaying this year.
For example, if you sell your home during the year your estimated tax payments will go up. You will have to use the Amended Estimated Tax Worksheet 2-9 to refigure what you owe. IRS worksheet 2-9 just takes your new estimated tax amount and divides it up among the remaining quarters of the year.