This is the first full year I am receiving Social Security. I also have an IRA. I usually make a withdrawal from the IRA at the end of the year, with the amount varying on my current financial needs and some other factors. But IRA withdrawals go into Adjusted Gross Income, which in turn goes into the formula that determines whether -- and how much -- federal tax I will have to pay on my Social Security benefits. In my case it can make a big difference. (SS and any IRA withdrawals I make are the bulk of my income.)
Now, if my year-end IRA withdrawal is one that takes me into the range where my SS income is taxable, will I be charged a penalty for not having made estimated tax payments during the year? If the answer is yes, how do I know how much estimated tax to pay, when I won't know until year-end what my IRA withdrawal will be?
On a similar note, what if I don't make an IRA withdrawal this year, but -- at year's end -- come into some other income that makes, say 75% of my SS benefits taxable? Same questions: Would I be penalized for not having made estimated tax payments? And how would I have known how much they should be "in advance"?
