I lost my job part way through the year at 63 YO. I have been taking income from my retirement accounts since. I didn't know I have to prepay taxes if there is no payroll withholding. Can I appeal this? Do I have to pay taxes quarterly in the future when taking funds from IRAs?
There is no appeal. You can have tax withheld from your IRA distributions.
Thank you for the info. I'll look into how to prevent this from occurring again. Felt like a trap. Nearly no one knows all of the the tax nuances of the tax code. What I don't understand is why I found this out today from turbotax for an underpayment on my 2022 taxes but nothing from the IRS.
The IRS doesn't know what your return will be for 2023 and really doesn't care until you file and underpay. Some taxpayers prefer to pay the penalty for various reasons. You'll need to pay estimates and if you don't the IRS will not tell you but you will owe penalties.
the simplest way to meet the prepayment requirements is to have withheld from your 2024 pension payments 100% (110% if your 2023 adjusted gross income was over $150,000) of your 2023 tax. This can be reduced if you have taxes withheld from other sources.
or you can pay estimates each quarterly 25% (27.5% if 2023 AGI over $150k) of your 2023 tax
payments due 4/15, 6/17, 9/16 and 1/15/2025
also, you can combine methods. some withholding and some estimated payments
each period you must meet the % threshold.
Yes you can request a waiver for the first time abatement.
Check Part II Box A on Form 2210.
You are to attach an explanation statement, which TurboTax will prompt you for, hopefully.