The rule that avoids the underpayment penalty: pay at least 100 percent of last year's tax (110 percent if prior-year AGI exceeded $150,000) or 90 percent of this year's, through withholding and estimates.
Safe harbor turns an unpredictable year into a known number. A crypto trader who cannot forecast gains can pay 110 percent of last year and owe the rest in April with no penalty.
Yes, and withholding is treated as paid evenly through the year, which makes a late-year W-4 increase a way to cure earlier quarters.
Last reviewed September 15, 2026. Tax rules change; confirm current law before acting.
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