@fanfare wrote:
You can't make a withdrawal to cover taxes because that would be taxed.
You are in the fourth estimated tax quarter and the estimated tax is due on or before Jan 15 2024 for the end of 2023.
@Wiz222
Well, it's a little bit like Xeno's paradox of Achilles and the tortoise.
Depending on the taxpayer's other income and filing status, the tax on a $65,000 withdrawal is likely to be $14,300-$15,600. Assuming they have no ready funds and must make a second withdrawal to pay the tax, a withdrawal of $15,600 will result in additional tax of $3744. Then a third withdrawal of $3744 will result in additional tax of $898. A fourth withdrawal of that amount will result in tax of $215, then $52, then $13, then $4, then $1. But the $898 is less than the threshold for a penalty, so they can probably stop there. A reasonable estimate seems to be that if the taxpayer must withdraw more funds to pay the estimate, they should probably withdraw and send to the IRS about $18,000–20,000, depending on whether they will be in the 22% or 24% tax bracket. That should be close enough or even a little over, and if the estimate is over-paid, it will come back as a tax refund.
