Roth IRA conversion 22k in 4th quarter 2018. Do I pay estimated tax by 1/15/2019 OR can I file and pay when I file as long as I pay 100% 2017 tax liability?

[dmertz]

The US tax system is a pay-as-you-go system.  A sufficient amount of tax withholding or estimated taxes are generally expected to be paid by the quarterly due date, in this case, 1/15/2019.  There are several safe harbors that will avoid the underpayment penalty if the balance due is paid by the due date of the tax return, April 15, 2019, such as having a balance due of no more than $1,000 or 100% of your 2017 tax liability, but the $22k of additional income resulting from the Roth conversion could put you over the amount covered by any of the safe harbors.  It would be best to make an estimated tax payment by the 1/15/2019 due date sufficient to cover your tax liability for the year when added to your other tax withholding and estimated tax payments for the year, but you should pay enough tax withholding and estimated taxes by 1/15/2019 to at least be sufficient to bring you to the amount of your 2017 tax liability or to within $1,000 of your anticipated 2018 tax liability.

Topic Number 306 - Penalty for Underpayment of Estimated Tax:  https://www.irs.gov/taxtopics/tc306

[colecoalkohl]

So, even if last years tax liability was 3k and I pay that this year, I would still have to pay tax on 22k conversion to come within the 1k owed?  I thought that was what the safe harbors were for—unforeseen income—and that as long as you paid 100% of last years tax liability you could pay the rest at tax return time

[dmertz]

I originally mentioned in my answer only the $1k safe harbor, but, as you mentioned in your question, there is also a safe harbor of 100% of last year's tax liability.  Still, with a substantial increase in taxable income of $22k you might want to pay as much of your estimated tax liability by 1/15/2019 as you practically can so that you don't risk coming up short on funds to pay the remaining tax liability by April 15.  Also, don't forget about state taxes.

[colecoalkohl]

As long as I pay 100% of last years tax liability will I be free of underpayment penalty?  I’ll have The money in time it’s just I’d rather keep my money and invest it for myself.

[dmertz]

Correct for federal taxes.  State requirements might be different.

[colecoalkohl]

And there is no problem in filing for extension to 10/15 date?  My exemptions are way lower on State so I pay out the wazoo to them anyway.  

[colecoalkohl]

Thank you for all of your help

[SteamTrain]

...for 2018 taxes, you will still have to pay your full estimated taxes due for the 2018 tax filing by 15 Apr 2019....even if you get an extension.  You pay at the time you file the extension  IF you don't pay with the extension application, then any balance due that shows up on 15 Oct will get 6 months of penalty and interest assessed, even with the extension.  

[colecoalkohl]

Thanks for the heads up

[SteamTrain]

...and don't push any of the deadlines.  We get hundreds to thousand's of folks who wait until any deadline date to act...and servers get clogged, internet gets overloaded, submission computers crash...and the IRS doesn't care whose fault it is...if you are late...you are late.  Get everything done & paid "at least" 10 days ahead of any deadline...then when something is rejected or an error occurs, you still have some time to fix it.