Estimated tax payments dependent on unknown-size year-end IRA withdrawal

[fanfare]

"h eliminates the need to predict how much of my SS will end up taxable before knowing the ultimate IRA distribution amount"

 You need to calculate how much your SS will be taxed with a distribution so that distribution withholding can cover that tax also.

@bextel 

[Opus 17]

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@fanfare wrote:

"h eliminates the need to predict how much of my SS will end up taxable before knowing the ultimate IRA distribution amount"

 You need to calculate how much your SS will be taxed with a distribution so that distribution withholding can cover that tax also.

@bextel 

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Not necessarily.  The total withholding for the year either needs to be 90% of the current year taxes (which requires a calculation) or 100% of the previous year taxes (which just needs a copy of last year's return.)

[fanfare]

@Opus 17--

but the post was referring to the 90% current year rule, which requires a calculation.

@bextel --

withholding needs to meet only  the smaller amount of the two rules.

[bextel]

Thanks for the additional thoughts.

I was aware that any taxes on my SS benefits should be considered in determining the amount of withholding I specify for my year-end IRA distribution.  As my original post says, "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."  My conundrum was determining the amount of estimated quarterly payments in advance of knowing the amount of the IRA distribution -- and thus the amount of SS that would be taxed.  But with what I've learned here, that problem goes away because a withholding payment -- even if all made in December -- is considered by the IRS as spread across the year.

While I was also aware of the rule that underpayment penalty can be avoided by paying at least as much tax as owed last year OR 90% of the current year's tax -- whichever is lower --  I appreciate the reminders.

[bosso3]

I have the same issue.  Actually, since TurboTax helps prepare Estimated Tax Payments and vouchers, this is a product question.  I do not see a way to use TurboTax to calculate Estimated Tax Payments that vary by due date.  Does such an option exist?

To your question about whether or not your Social Security will be taxable:

If your IRA withdrawal is large enough, it will increase the taxable amount of your Social Security income. 

That will increase your Total Income (Form 1040, line 9), which increases your Adjusted Gross Income (Form 1040, line 11) and your Taxable Income (Line 15), and hence your taxes.

The amount of the increase can be estimated by making a TEST COPY of your previous year's TurboTax file and entering your estimates in there.  This will give you an idea of the tax impact various IRA withdrawal amounts will have on your total taxes.

CAUTION:  Be sure to make these "what if" changes to a COPY of your file, and not the actual live file that you filed with the IRS.

I will repost this question as a product question.