Need I pay tax on RMD income not received yet?

[abclapp914]

I withdrew 2018 my RMD on 12/24/2018, filed my return 4/5/2019, but I received a tax penalty on 4/29/2019 for "Failure-to-pay proper estimated tax" for 2018.  I had no other income for 2018 other than a monthly pension of $24.93 (total of $299.16, which I added to the RMD).  Am I supposed to pay tax on income I haven't received yet (the RMD)? The billing summary (attached) shows tax I owed equaled exactly my "payments and credits" to the penny.  But added $223.61 for "failure to pay proper estimated tax penalty."  Never explained why there was a penalty.

[Lisa995]

Did you owe money on your tax return last year as well?

[abclapp914]

No.  2017 accepted without comment or reply.

[Lisa995]

You didn't have to pay any taxes with the 2017 tax return?

[abclapp914]

No penalty taxes, no.  I paid full taxes on the 2017 RMD, but nothing additional.  Followed the same procedure, withdrawing 2017 RMD near end of December, filing and paying tax in April.

[Lisa995]

Ok, let me rephrase what Im asking.

Did your 2017 tax return have a balance due?  If so, then you were supposed to pay in estimated taxes throughout the year up to the liability on the 2017 taxes to avoid the estimated tax penalty on the balance due on the 2018 tax return.

[abclapp914]

Clarify "balance due."  I withdrew the RMD end of December, paid the tax in full in April.  No reply from IRS, so I assumed the amount paid was correct.  Again, I had no (real) income in 2017 except RMD at the end of year.  I had no monthly or quarterly income, only the RMD at the end of 2017.

[Lisa995]

So the 2017 tax return showed a balance due on it and you paid it by 4/15, that's fine for 2017.  But now 2018 comes around and you have a balance due showing on the tax return again.

If this is your situation, you may be able to reduce/eliminate that penalty using Form 2210 Annualized Income method, since you're not getting the money until the end of the year.....IRS only sees that you owed money in 2017 and again in 2018, they don't know when during the year you received the income that created the tax liability.

[Anonymous]

the problem is that the IRS assumes the retirement income is received evenly throughout the year.  so they use the simplified method to compute penalties.    do as Lisa995 suggests prepare the AI section of 2210 and send it in with notice.  respond asap and use tracking service.  the IRS usual position is that if you don't respond timely, then you agree with them