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You can use a third method for avoiding any penalties - the annualized installments. Each quarter, you pay estimated taxes based on your income so far that year. At year end, you'll need to use form 2210 and it's schedule AI to show how your income came in during the year and that you paid the right estimate each quarter.

It's a little more involved than the quick and easy methods, but it shouldn't be too tough.

--Peter
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