Hal_Al
Level 15

Retirement tax questions

The distribution will be taxed at your marginal tax rate, probably 12%.  Anything over $10,000 will also be subject to the 10% penalty.

 

It is not necessary to send in estimated payments. Most people can wait and pay at tax time. You should make estimated tax payments for the current tax year if both of the following apply:
- 1. You expect to owe at least $1,000 in tax for the current tax year, after subtracting your withholding and credits. 
- 2. You expect your withholding and credits to be less than the smaller of: 90% of the tax to be shown on your current year’s tax return, or  100% of the tax shown on your prior year’s tax return. (110% if your income was more than $150K) .

 

If your goal is just to avoid the underpayment penalty, then paying 100% of the prior year tax liability is the “safe haven”