It was my understanding that if you completed a roth conversion let's say in November, the taxes are not due until you pay your federal and state taxes by April 15th of the following year.
Even though I opted to pay the full amount of taxes for my November Roth conversion in December/January as a 4th quarter payment, Turbo Tax included a penalty amount on my federal and state return. Please note that I am to receive a refund for both. The 1099 R does not reveal the month of conversion; therefore, am I to assume this conversion is taxed for the entire year? Please help.
By default, income and tax withholding, but not estimated tax payments, are treated as being received and paid evenly throughout the year. This means that there would be an underpayment of taxes for the earlier tax quarters if a large amount of income received late in the year for which an estimated tax payment is made. Eliminating the penalty for the earlier quarters requires annualizing income on Schedule AI of Form 2210 to cause income to be treated as received unevenly throughout the year. Schedule AI is where you would indicate that all of the income from the Roth conversion occurred in Q4.
It depends. The IRS may assess an estimated tax penalty if 4 equal payments are not made through the year. You may be able to waive the tax by completing form 2210 as suggested by the IRS in Topic 306. Turbo Tax will generate 2210 form if you need it in your return and it will allow you to enter information that may help you waive the penalty.
By default, income and tax withholding, but not estimated tax payments, are treated as being received and paid evenly throughout the year. This means that there would be an underpayment of taxes for the earlier tax quarters if a large amount of income received late in the year for which an estimated tax payment is made. Eliminating the penalty for the earlier quarters requires annualizing income on Schedule AI of Form 2210 to cause income to be treated as received unevenly throughout the year. Schedule AI is where you would indicate that all of the income from the Roth conversion occurred in Q4.