Even if you fail to make estimated tax payments, you will not be liable for any underpayment penalty provided that any one of the following applies:
The total amount of tax withheld and estimated tax payments is at least 100% of your tax for last year (110% for higher income taxpayers with adjusted gross income over a certain amount),
The balance of tax you owe according to your return is not more than 10% of your total tax for the year, and you made all your estimated tax payments on time,
The total amount of tax reported on your annual return, minus the amount of income tax withheld, is less than $1,000,
You did not have a tax liability last year, or
You did not have any tax withholding, and your current year tax liability (excluding any household employment taxes you owe) is less than $1,000.
There are special rules for farmers and fishermen, as noted above.
If the above exceptions do not apply, you could be subject to an underpayment penalty. And, as mentioned above, it is possible that you could be subject to an underpayment penalty for a certain period, even though you paid sufficient estimated taxes for the whole year. In most cases the IRS will calculate the penalty for you. You will only need to file Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts, in the following situations:
You are requesting a waiver of part of the penalty.
You use the annualized income installment method to pay estimated taxes.
You treat federal income tax withholding as paid on the date it was withheld.