I am considering a Roth conversion. For sake of conversation make it for 2022 tax year. I've determined approximately how much I can safely convert (dividends late in year will help finalize amount) . I want to avoid any penalty for 'under withholding'. So the clarification I need is on just exactly how I can time the conversion and time the tax payment to achieve both ease of doing so (process) and avoiding the penalty. (I also want to avoid having to fill out pages of additional tax documentation. That goes against ease of process)
I have three methods I've been exploring:
1) Make conversion in Dec of 2021 and pay all the tax due online with IRS and State. That is the seemingly easiest way to do it once and be done for the year. However I wonder if the IRS and State taxing agency will apply a penalty even though in effect I have paid the taxes as the taxing event occurred. In my mind that is timely.
2) Make quarterly conversions and make the online tax payments those conversions necessitate at the same time. I've never done quarterly estimates or payed online in a systematic way like this before but it seems several people I have spoken to begrudgingly do so.
3) This one seems the most difficult to be precise. Increase tax withholding on my pension so as to pay every month an additional amount to state and fed representing the anticipated amount I will only know precisely at the end of the year (when dividends are paid).
I would really appreciate some authoritative notions about pros and cons of each or perhaps something I've missed or misunderstand.
