What is Estimated Tax?
Estimated tax is the method used to pay tax on income that is not subject to withholding, such as self-employment income, interest, dividends, rents, alimony, etc. In addition, if you do not elect voluntary withholding, you should make estimated payments on other taxable income, such as unemployment income and the taxable portion of social security benefits. 

Who needs to pay estimated taxes?
In most cases, you must make estimated payments if you expect to owe at least $1,000 in tax in 2008 and you expect your withholding and credits to be less than the smaller of:

90% of the tax shown on your 2008 tax return, or
100% of the tax shown on your 2007 tax return. Note exceptions apply for higher income taxpayers

Further, if you did not file a 2007 tax return or if your 2007 return did not cover the full 12 months, the 100% rule does not apply.
 
Special Rules

Higher income taxpayers: If your adjusted gross income for 2007 was more than $150,000 ($75,000 if your filing status for 2008 is married filing separately) substitute 110% for 100% in Rule #2. This rule does not apply to farmers or fishermen.

Farmers and Fishermen: If at least two-thirds of your gross income in 2007 or 2008 is from farming or fishing, substitute 66 2/3% for 90% in Rule #1.