Convert IRA to Roth in 2025 & 2026

[howjltx]

Convert IRA to ROTH (cIRA2ROTH) is the following true:

cIRA2ROTH in late Dec 2025 results in taxes on full year’s tax bracket being due on 15-Jan-26.

- With safe harbor rules protecting any miscalculations resulting in taxes due 15 Apr 2026.

What is the Form number to report I filed my taxes Quarterly (25% Qtr.1, 50% Qtr.2, 75% Qtr.3, 100% Qtr.3 + cIRA2ROTH in Dec2025) to avoid penalties and how to initiate it in TurboTax desktop Premier.

Next, cIRA2ROTH in mid-January, is amount due calculated at what my final 2026 tax bracket will be in 2026 or less (like IRS calculates winning the Lottery)?

When is it due, I have seen too many stories: (immediately by end of January, 1st Qtr, 15-Apr26, even use 1040-ES, spreading over 4 Qtrs. with having no penalties).

Hard to believe the last one since I read someone convert in November paid tax in late December and was penalized the next 15-Apr, pretty heavily like $2k per $100k-150K.

[ThomasM125 · Accepted solution]

To avoid a penalty for late payment of tax, the safe harbor is to pay in 100% (110% if income over $150,000) of your previous year's tax liability on a quarterly basis, or 90% of the current year tax on a quarterly basis. Otherwise, you can pay in the actual amount of tax due on your income for each quarter. If you choose that option, you may need to file Form 2210 as part of your yearly Form 1040 filing to report your income earned by quarter. You can complete the form in TurboTax in the Other Tax Situations section and then Additional Tax Payments, then Underpayment Penalties.

You will use your final marginal tax rate to estimate the tax due by quarter, as that is the rate you will use to calculate the tax when you file your tax return. The tax is due quarterly based on the income earned in that quarter, unless you use the safe Harbor method in which case you take the total tax from the current or previous year and divide that by four.

[howjltx]

I ran the following scenario in TurboTax Premier 2025 desktop and it said I will not be penalized for underpayment.

Answered below, I accidently deleted this and can not recover.

[DaveF1006]

It depends. The 90% current-year tax rule is a valid safe harbor, but it can be tough since you have to estimate your 2026 tax liability accurately.

Since you mentioned your income puts you in the 32% bracket (and likely had an AGI over $150,000 in 2025), your "easiest" safe harbor is actually paying 110% of your total tax from your 2025 return. If you pay 110% of last year's tax in four equal quarterly installments, the IRS cannot penalize you—even if your Roth conversion makes your actual 2026 tax bill $500,000.

Now you ask if you need to pay 32% on the $330K? The IRS does not require you to match your marginal bracket during the year.

• You only need to ensure: You pay 110% of your 2025 tax, OR 
• You pay 90% of your 2026 total tax.

If you meet either one, no penalty, even if you owe a large balance in April. Remember, unless you can accurately predict what your 2026 tax laiblity is going to be, it would be recommended to pay 110% of your 2025 tax to ensure you won't have an estimated tax penalty for 2026.

@howjltx 

[howjltx]

Thanks for responding and explaining that the 90% for 2026 is what I need to stay above divided by four.

Not sure if I will do another conversion this year it depends on how much less taxes I can save by spreading the conversions over multiple years. I converted 1/2 the total in Dec 25 and 1/2 of the remaining balance (so about 1/4 of original balance) in Jan just because if I try to convert at 24% or 32% tax bracket rate, I will never knock down the balance due to the gains that grew in the IRA, now they grow in the Roth. I calculated all of the possible scenarios, and this was maybe $10k more in taxes than attempting to do it at the 24% over 10+ years. Now I can convert everything in between 1-8 years, my choice. I started all this by signing up for a free 30-day trial on a program called "Boldin" but tried to cancel it since I did not like how they handled MAGI and IRMA, where they kept renewing it for free where I was hoping they would stop calling MAGI the same as AGI and they did not consider IRMAA as a tax or penalty when it is. I finally gave up renewing and went back to my trusty Excell worksheet.