So every year I've gotten a tax refund from the Feds, not always the state. This year one I'm making more money off the rentals than I have in past years. Last year I made $15,000 from the rentals, this year I'm on track to make $40,000. Which makes me think I should be paying quarterly taxes. I'm afraid to both over-pay and to have underpaid my taxes, I hate fines and the IRS is scary.
From what I've read they say to look back at your last years taxes to estimate your quarterly taxes. But that doesn't seem to help if last year I was not making enough money to tip into needing to do things quarterly. So here are my questions:
1) Can/should I start paying quarterly half way through a year?
2) Am I right to estimate my increased taxes to be (40,000-15,000)* tax rate? When I do that and subtract it from my refund last year I owe about $2000.
Also what if, I pay quarterly under one assumption (I'm making $40,000) but next month that assumption turns out to be way off. Am I then penalized for not having a business with steady predictable income?