If your income is relatively level throughout the year, you should probably use what the IRS refers to as the Regular Installment Method. If you have significant fluctuations in your income, you may need to use the Annualized Income Installment Method.
Regular Installment Method
Under this method, you basically take your estimated required annual tax payment, divide it by four, and pay the amount due each period. If you have to refigure your estimated tax after you make your first payment, because of changes in your personal situation that could result in changes to the amounts you estimated for income, adjustments to income, deductions, exemptions or credits, and these changes result in more tax, you can pay the entire additional amount by the due date for the next period, or you can spread the difference over the remaining periods.
Annualized Income Installment Method
If your income is not evenly distributed throughout the year, and there are certain periods in which your income is higher, you may need to use the annualized method. There is a worksheet in Publication 505 that you can use to determine your estimated tax payments by period. If you are self-employed, there is a separate worksheet for annualizing your estimated self-employment tax.
To complete the worksheet, you will need to have a reasonable estimate of your income and deductions by period, showing the accumulated amounts as they build up from the beginning of the year through the end of each period. This worksheet will then annualize your taxable income and will show you the amount of the estimated tax payment you need to make each period. If you use this annualized method, you will need to file Form 2210 with your annual income tax return.