Business & farm

If you expect to owe over $1,000 when you prepare your tax return, then yes, you should make estimated quarterly payments. Generally speaking, the IRS assumes that income is earned ratably throughout the year, so they expect the quarterly payments to be paid ratably as well.  If your income varied during the year because, for example, you converted pre-tax retirement funds to a Roth IRA late in the year, you may be able to lower or eliminate the amount of one or more required installments by using the annualized income installment method.

If you do the Roth conversion between September 1 and December 31, your estimated tax payment for that income is due January 15th of the following year. You can choose to pay the estimated payment via sending in the Form 1040ES with your payment, or paying online directly at the IRS website.  If you pay the IRS at the time of conversion via using funds in your brokerage account, that is treated as making an estimated quarterly tax payment.

Making a quarterly tax payment this year does NOT obligate you to make quarterly payments in future years  - the trigger for paying estimates is based on whether or not you will owe over $1,000 when you file your tax return. If you believe you will owe over $1,000 on your 2025 tax return, then you will want to make estimated quarterly payments for that year (or have additional withholdings from other income sufficient to cover your total 2025 tax liability).

As to what funds you use to pay the estimated taxes - that is totally up to you. Just be aware the the IRS treats W2 and 1099R withholdings as being withheld ratably throughout the year, whereas making an estimated tax payment is deemed as being paid in that quarter.  So, if you need to "catch up" on making a payment for income that occurred earlier in the year, know that withholding taxes from a fourth quarter retirement plan distribution may be a better option than making a fourth quarter estimated tax payment.

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