Hi fanfare,
Thank you for the prompt reply. Please allow me back brief to see if I understand.
My AGI for 2024 was below $150 K. Say my taxes for 2024 were $21,500 and my projected withholdings for 2025 are $21,000. If I understand your response, I do not need to make any estimated tax payments if my withholding were $21,500 ($500 more). That said, I could eliminate the need for estimated tax payments just by increasing my withholdings on one of my pensions by at least $500 or even $1000, just to provide a bit of a cushion. Am I tracking?
If the above is correct, what happens if my AGI for 2025 exceeds $150,000 and the resulting tax liability exceeds my projection by $4,000 or $5,000? I will have a hefty tax payment due upon filing, but will I pay a penalty for underpayment? Based upon the prior year's tax rule I do not think so.
Given the above tax bill due at filing for 2025, what is the impact in 2026? Will my 2026 withholding projections need to equal 110% of my tax liability in 2025 to avoid estimated tax payments? Wash, rinse, repeat.
Still have 2 years before I have to worry about the impact of RMDs so that will be something down the road.
Thanks for your time and the assist.
Chuck
