Estimated payments are calculated four times during the year. If your actual income for the first three months of the year is quite high, then the estimated taxes for that first payment should also be higher. It isn't a system where you can 'catch up' by making a large payment with the fourth estimated payment.
Withholding, however, is treated as being paid throughout the year -- regardless of when it actually happens. So, yes, having taxes withheld from one-off payments such as RMDs and conversions could help reduce any underpayment penalty.
Another way out of an underpayment penalty is to report to the IRS the actual timing of your income. For instance, if it's your fourth quarter of income that is substantially higher than the rest, then your fourth quarter estimated payment should be the one that's higher. It's not just higher to catch up with early-in-the-year income. This is referred to as "annualizing" your income and could potentially provide some relief. More information about how to avoid this penalty in this article: What is Form 2210?
Thank you for participating in this event!
-- KimberW
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
