You are misreading. It was not 95% of the tax it was 95% of income received in December. There was no way to normalize or annualized a one time payment. Looking back and looking forward had no impact on this.No, ssel has it right. Annualizing Income on Form 2210 Schedule AI is for dealing with this. In essence, the schedule takes your Q1 income, annualizes it, calculates the tax on it, and if you've paid 22.5% of it (90% of 25%), you've met your Q1 obligation. Repeat for Q2 (45% - 90% of 50%) and Q3 (67.5% - 90% of 75%). The balance is due 1/15.
This exceeded the rule of paying 95% of your tax by the fourth quarter. The unexpected income was issued in December and accounted for 95% of our total income for the year. Different rule.
Keep in mind the safe harbor test is the lower of 90% of the current year's tax and 100% (110%) of the previous year's tax. Annualizing income changes the 90% of current year's tax safe harbor to one determined quarterly based on each quarter's YTD income.
BTW, there is no safe harbor or other test involving 95% of the tax due. No idea from where you got 95% but it's not a relevant number.
Statistics: Posted by Afewquestions — Tue Feb 10, 2026 2:52 pm — Replies 36 — Views 2655