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Returning Member
posted Jul 15, 2021 2:22:21 PM

Timing to pay taxes

If taking money out of a 401k or Pension type account on a monthly or quarterly basis, is it required to pay taxes at the time of the withdrawal or can you wait till the end of the tax year and just pay any Federal and State taxes that are due at that time? Are there any penalties for not making any periodic tax payments through the year?

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1 Replies
Employee Tax Expert
Jul 15, 2021 4:56:47 PM

Hi DW1960!

 

Yes, taxes are a pay-as-you-go system, and you can incur penalties if there are any quarters of the year in which the tax is underpaid, so it's best to have tax withheld at the time you receive the income. Whenever that's not possible, you'd want to send in an estimated tax payment during the quarter in which you received the income. Here's more information on how to do that (with printable vouchers on page 11):

 IRS Estimated payments.