I'm 25 years old. I will be receiving a one-time $1M transfer into my personal checking account from an escrow company here in the states. This is legitimate income. When do I pay taxes on this? Immediately or do I wait until tax season and claim it as income? Thanks for the help!

Can depend on the reason for the income, one option I did not see, quarterly estimated taxes

IIf this is taxable income (and you haven't yet said what the source of money is, so whether it's truly taxable or not - and at what rate - is still open), and assuming that your 2012 tax bill will be significantly higher than your 2011 taxes, you actually do not have to pay until next April. There will not be a penalty for under-payment of taxes as long as the amount of income taxes you pay during the year (either as withheld from your paycheck or paid by you as estimated tax payments) equals at least as much as your 2011 tax bill. So it can be argued that your best deal is to just hold the cash in an interest bearing account until next April and pay the tax bill then. However, given the low returns of money markets today, I would suggest that it may be easier and less risky to pay the taxes in quarterly installments as estimated tax payments. We're already past the first quarterly estimated tax payment date, which was April 15. So divide the amout of tax due into thirds and pay on June 15, Sep 15, and next Jan 15 using the 2012 Form 1040-ES.

I have to disagree with ebaines on this one.

Determine your tax liability on the $1,000,000, then make a SINGLE estimated tax payment by 15 June 2012 to cover that liability. That is, In my opinion, the safest course of action.

Thanks for the info guys. The income is a consultant fee. I don't know if that makes a difference. How would I determine the tax liability? Speak to an accountant?

You can use on-line tax software to determine a quick estimate of the tax liability. If you must guess, gues HIGH and pay too much, because the under-payment penalties on $1 million can be substantial.

Here's a back of the envelope estimate for you: $1M income, single, standard deduction will generate a tax bill of about $315K. It would be prudent to pay this with your June estimated tax filing, but you should pay at least as much as your entire 2011 federal tax bill. That will eliminate any possibility of underpayment interest or penalties.

I concur with ebaines' latest psot.