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94deadend
Returning Member

Change 4th quarter estimated quarterly payment?

Retired couple with AGI over $150,000 and consistent each year by year end; but, not evenly received, due to Roth IRA conversions at different times of the year. We have no withholding  on any income, so quarterly payments each year. Each year turbotax calculates quarterly payments based on 110% of previous years total tax. Each year there is a large excess eligible for refund or to be applied to current year's tax.

 

Rather than go thru overpay/refund each year, is it possible to make the first three quarterly payments based on the 110% figure and in January modify 4th quarter to equate to 100% of actual tax year tax and not incur any penalty or deal with form 2210? By that time, AGI & total tax could be figured close to 100%, but certainly more than 90%.

6 Replies
Bsch4477
Level 15

Change 4th quarter estimated quarterly payment?

No problem with your plan. Note that IRA withdrawals are considered to have been distributed equally during the year even if you withdrew it all in December. 

Critter-3
Level 15

Change 4th quarter estimated quarterly payment?

Tweak to "Note that IRA withdrawals are considered to have been distributed equally during the year even if you withdrew it all in December."

 

Conversions are not withdrawals or distributions and are considered taxable in the quarter they occur. 

 

Now if you have distributions then those are considered distributed equally during the year and that includes  any withholdings you have taken even if the entire distribution is done on 12/31. 

94deadend
Returning Member

Change 4th quarter estimated quarterly payment?

@Bsch4477Thank you.

94deadend
Returning Member

Change 4th quarter estimated quarterly payment?

@Critter-3Thank you for the clarifications. Doing both withdrawals and conversions, but since we are retired, no contributions. Do you agree that topping-off with 4th qtr payment versus overpay/refund each year will keep us out of the penalties and need for form 2210?

Critter-3
Level 15

Change 4th quarter estimated quarterly payment?

Yes ... that would keep you from having to deal with the painful form 2210. Any refund can always be applied to the first estimate of the next tax year and you can adjust the next year's estimates accordingly. 

94deadend
Returning Member

Change 4th quarter estimated quarterly payment?

@Critter-3 

I'd rather not have an excess to begin with, so will plan on getting even with lower 4th quarter payment in January. Thank you much.

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