Calculator / Uneven income
Uneven income and quarterly taxes: the annualized method
If you earn most of your money in a few months, equal quarterly payments can mean paying the IRS long before you were paid. There is a rule for that.
The problem with equal payments
The default way to avoid an underpayment penalty is to pay a quarter of the year's required amount on each due date. If your income arrives in waves, such as a seasonal business, a big commission, or a side project that pays out once, the early payments can be far more than you had earned at that point.
What the annualized income installment method does
The IRS lets you base each required payment on the income you actually earned up to that point, scaled up to a full year. You use Form 2210, Schedule AI, to show it. Each period gets its own required payment, so a slow first half means small early payments and a larger one later.
| Payment | Income counted | Annualizing factor | Share of annual tax due |
|---|---|---|---|
| Q1 | Jan 1 to Mar 31 | 4 | 22.5% |
| Q2 | Jan 1 to May 31 | 2.4 | 45% |
| Q3 | Jan 1 to Aug 31 | 1.5 | 67.5% |
| Q4 | Jan 1 to Dec 31 | 1 | 90% |
The shares are cumulative: by each due date the total paid should reach that percentage of the tax on your annualized income, less what you already paid.
A simple example
Say you earn $5,000 of profit by March 31 and nothing else until a $60,000 project pays in August. Equal installments would ask for a large payment in April. With the annualized method, the April figure is based on $5,000 times 4, which is $20,000 of annual income, so the payment is small. The bigger payments come due after the money arrives.
Good to know
- It affects the penalty, not the tax you owe for the year. The total tax is the same.
- You choose it when you file, by attaching Schedule AI to Form 2210. Tax software often does this for you at that point. A calculator like this one helps earlier: it shows what each due date would require before you pay.
- Self-employment tax is annualized as well. Wages and other income that arrive evenly are also part of the picture.
- The 2026 version of the form has not been published yet. Our figures follow the 2025 form and we will recheck them when the new one appears.
Choose "In lumps or seasons" in the calculator and enter your profit for each of the four periods to see a payment for each due date.
This is general information, not tax advice. See the disclaimer.
Sources
Last checked October 11, 2026.