@dmertz
Thank you for responding to my question. I do appreciate your time.
I do want to clarify to make sure I understand what you're saying and to be honest I have a hard time understanding some of the terminology used because I don't dabble in my Roth IRA and I file taxes once a year so I'm going to try to interpret what you said. Also, not being mean or anything but could you dumb it down as if you're explaining it to a 5th grader? it'll help me be aware of the context.
Based on what you're saying, and I quote from your post:
"to avoid having to pay more with estimated tax payments or a balance due on your tax return, or to avoid needing to annualize income on Schedule AI of Form 2210 to eliminate an underpayment penalty for earlier tax quarters."
And yes, I don't want to get in trouble so if there are any additional taxes that I need to pay for both state and fed, then I rather know how much I need to withhold when it comes to doing my distributions.
I'm not doing any Roth conversions, this just a simple taking money out of my Roth IRA. and to quote:
"you would need to determine your federal marginal income tax rate based on everything else on your federal tax return and add 10% for the penalty. Utah has a flat tax rate of 4.85%, so your marginal state tax rate would be no more than that. Ideally you would create a simulated tax return to determine your incremental tax that results from the distribution, which is most easily done with the CD/download version of TurboTax."
I do have Turbo Tax and have been getting my taxes done with them for several years now, is there a link for me on the TurboTax page where I can do a simulation of finding my federal marginal income tax rate along with the 10% penalty on top? Also, I haven't had a job for a year, so I'm not sure how this would work. I'm basically just finding out how much tax to withhold federally since the state tax for Utah is 4.85%.
and then lastly:
"Given that your Roth IRA contribution basis is $1,200, it seems a bit unusual (although not impossible, particularly if you have basis in taxable Roth conversions) that you would have much more than $1,200 available to distribute, so does it even matter much how much you have withheld for taxes?"
are you saying that even if I withdraw out more than $1,200 would it matter, given if I take an excess amount I would have to input all of this on Turbo Tax and it would just tell me how much I owe in both Fed and State along with the 10% on top?
Thank you kindly
