If you will still be getting an overpayment with RMD, then you are not required to pay any estimated tax.
People pay estimated taxes to avoid having to pay underpayment penalties. I have always recommended folks to use the 100/110% safe harbor rule below.
If you often make charitable contributions, you should consider using your IRA to make the donations. That is called QCD or Qualified Charitable Deduction. QCD is counted toward RMD. If RMD is $1,000 and you write a $200 check from your IRA and send it directly to the charity, you will only have to withdraw an addition $800. Only the $800 will be added to your income.
To avoid the IRS underpayment penalty, taxpayers can follow these strategies:
• Pay 90% of this year's tax: If your income is stable, estimate your tax for the current year and pay at least 90% of it throughout the year.
• Pay 100% (or 110%) of last year's tax: If your AGI was $150,000 or less, pay 100% of your last year's tax over four installments. If it was higher, pay 110%.
• Meet safe harbors: If you owe less than $1,000 after subtracting withholding and credits, you're automatically safe.
These strategies can help ensure that taxpayers pay enough taxes throughout the year to avoid penalties. It's important to stay compliant with tax laws and understand the rules to minimize unnecessary costs.
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