Hi Richie.
Every October you should pay:
- Any balance of income tax owed for the previous year, and
- Preliminary income tax for the current year.
Your preliminary income tax payment for a particular year should be equal to either 100% of the previous year's income tax liability or 90% of the current year's income tax liability.
So applying the above to your circumstances:
- You'll shortly submit your 2010 income tax return together with the associated tax payable for 2010.
- You're also required to pay preliminary income tax for 2011. As outlined above, this payment should be based on either 100% of your 2010 income tax liability or 90% of your 2011 income tax liability. Unless you expect your 2011 liability to be significantly lower than your 2010 liability, it makes sense to base your 2011 preliminary income tax payment on 100% of your 2010 income tax liability (on the basis that you don't then have to estimate your final 2011 liability and therefore risk the imposition of interest charges if you get your calculations wrong).
- Then in October/November 2012 when you're submitting your 2011 income tax return, you've to pay any balance of income tax payable for 2011 (i.e. on top of the preliminary income tax payment you made in October 2011) and you'll also have to pay preliminary income tax for 2012.
As an aside, if you're basing a 2011 preliminary income tax payment on 100% of a 2010 income tax liability, you've to include USC as if it were in place during 2010.