• Self-employed taxpayers must make quarterly estimated tax payments.

  • As a rule, these estimated tax payments are made in four equal installments using the regular payment method.
  • The annualized income installment method recalculates the estimated tax payments so that they relate to when the taxpayer earned money during the year.
  • It is designed to limit underpayments and related underpayment penalties associated with uneven payments where the taxpayer’s income fluctuates throughout the year.