Yes, you are correct. As long as you pay 90% of your tax liability in quarterly payments during the year, you will avoid the tax penalty for underpayment.
As for combatting increased income and increased tax liability, that can be rather difficult once you are no longer eligible for retirement contribution distributions. Taxes simply put, comes down to your total income and deductions and credits. Some things that can potentially give you tax credits to lower the liability would be as follows:
- The Residential Energy Credit- If you made certain home improvements such as adding solar to your home, you could claim a credit of 30% of the total cost of the project. This is a non refundable credit, however, it can be carried forward until 2032 when the credit is set to expire or until used up whichever comes first.
- Home Improvement Energy Efficient Credit- if you make improvements like replacing your windows, heating or air system, or heat pumps, you can claim up to $3,200 in credits.
- Purchase an Electric Vehicle that qualifies for the EV Credit-New. If you are married filing jointly, the income limit is capped at $300,000 and is worth up to $7500.
With your standard deduction so high, any itemized expenses would be hard to be greater than your standard deduction. So other than a large donation to charity, you would not likely benefit from any itemizable expenses if you are not already able to benefit from them.
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