estimated taxes

[pa210]

my wife and I are retired.  We live on social security, joint savings account and iras.  I have been doing estimated taxes for past few years. Can I simply pay full taxes when we complete our 1040SR in 2025 with no penalties?

[SwapnaM]

If not enough taxes are withheld when you file your taxes, then you will be hit with underpayment penalties!! It would be advisable to continue with estimated taxes if your retirement accounts & social security have not enough tax withheld. Alternatively, you can ask them to withhold more to avoid underpayment penalties. 

This penalty specifically applies when the total tax payments made during the year fall short of either 90% of the current year’s tax that’s owed or 100% of the previous year’s tax. For those earning a high income, this minimum required payment increases to 110% of the prior year’s tax.

@pa210 Thanks for the question!!

[fanfare]

"We live on social security, joint savings account and iras. "

IRS requires you to estimate your tax and pay as you go.

The first test is whether your withholding covers your tax.

Social Security - you can have tax withheld monthly .

IRAs - you can have tax withheld.

savimgs account withdrawal - not taxed.

It the withholding covers at least  90% your tax, then you don't have to make Estimated Tax payments.

There is no penalty.

@pa210