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Estimated taxes for 2020

 
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3 Replies
AkinaLO
Expert Alumni

Estimated taxes for 2020

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Estimated taxes for 2020

Our mandatory RMD,s are being deferred for 2020.  That will mke a huge difference in our estimated taxes that have been figured from our 2019 taxes.  What do we do?  How to figure new amount will help.

 

BillM223
Expert Alumni

Estimated taxes for 2020

You might look at the IRS's Tax Withholding Estimator. While this is normally used to calculate withholding for a W-2, you can use it just to get an estimate on your taxes for 2021 when you will have to report (note: so far, all we know if that the requirement to take your 2020 RMD has been deferred, we don't know yet what might happen for tax year 2021).

 

This comes with a number of caveats: (1) the Estimator is using 2020 tax calculations and not the calculations for 2021, (2) the RMD is based on your IRAs value on the end of the year and we are not sure if you will calculate a new RMD for 2021 including both years, or if the 2020 calculated RMD will stay intact and the new 2021 RMD calculation will be added to it, or (3) if you will be required to take both RMDs in total in 2021 (as opposed to spacing it out over several years).

 

This method is not perfect, but there is no perfect method yet, given the uncertainty. But it will give you a reasonable starting point.

 

***Note*** in the Estimator, when it asks you about pensions, don't add Social Security here - SS is a separate question later on.

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