@Xian2 wrote:
I am planning to do a roth conversion in August this year, and will have a similar high tax due
is it correct just do some prepayment of tax by Sep15 to avoid any penalties later?
we have been retired for 4 years and got refunds of the last few years of return.... maybe that matters for some rules for penalty calculations?
thanks
I don't know exactly how to do this. @Critter-3 @VolvoGirl @Hal_Al
In general:
Because the IRS normally looks at income as if it was averaged over the whole year, they will expect to see equal installment payments for the Roth conversion in April, June, September and January. The "annualized" method looks at your income quarter by quarter, and as long as you pay the right tax for each quarter, you shouldn't get a penalty. You will want to make a payment before September 15, you can do that at www.irs.gov/payments.
If you look at form 2210, option C says "Your income varied during the year and your penalty is reduced or eliminated when figured using the annualized income installment method. You must figure the penalty using Schedule Al and file Form 2210." That's what you will report at tax time to try and get the IRS to eliminate the penalty. Someone else should be able to walk you through it in the program.
