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HenryT57
Level 1

Estimate taxes (1st year in retirement)

I retired at the end of last year and am trying to determine my taxes for this year. 

Below is my income and major expenses:

 

  1. Income:
    Pension :              $51,948
    IRA Withdrawal: $88,000   (Moving money into Roth IRA)
    SSN                      $21,373
    Rental Income    $24,000  (Property in CA)
    -----------
    Total:                  $185,321
  • Rental Property Expenses in CA:
    Mortgage         $11,375
    HOA Fees             4,752
    Property Tax         4,168
    Insurance             1,000
    ---------
    Total                 $21,295

Other factors:

HSA Contribution:        $3,000

Med Insurance cost:    $5,400 (COBRA from Jan - Aug)

Turn 65 in September

 

What would be my approximate tax?    Taxes are being withdrawn from my Pension, but won't come close to being the final amount.

Do I only need to prepay 110% of my 2021 burden so I won't be hit with a penalty?

 

Also would only my Rental property income be counted for CA state tax (moved to NV in May 202)?

6 Replies
SoCalGal22
Employee Tax Expert

Estimate taxes (1st year in retirement)

What a big year for you!  Good for you for looking at this in advance.

 

There are 2 places you can enter all this information

  1. Log into your TurboTax Account and see if you have a Tax Estimator on the left side
  2. Go to our Tax Caster Tool and enter it there.

https://turbotax.intuit.com/tax-tools/calculators/taxcaster/

 

You can run the income for the whole year and divide the tax owed by 4 or you can accumulate as you get to each Estimated Tax deadline:

April 15

June 15

Sept 15

Jan 15

 

I hope that answers your questions. Please feel free to give TurboTax a call anytime if you have additional questions or need assistance.

 

Have a great day!

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Vinsim
Level 1

Estimate taxes (1st year in retirement)

Do the payments have to be equal and do they have to be on the prescribed dates ie June 15th, Sep 15th etc?

SoCalGal22
Employee Tax Expert

Estimate taxes (1st year in retirement)

On April 15 you want to pay taxes based on all income and expenses from Jan - March

On June 15 you want to pay taxes based on all income and expenses from Jan - May

On Sept 15 you want to pay taxes based on all income and expenses from Jan - August

On Jan15 you want to pay taxes based on all income and expenses from Jan - Dec.

 

Based on how much other income you have, u Social Security can be taxed at 0%, 50% or 85%.

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Vinsim
Level 1

Estimate taxes (1st year in retirement)

Thanks so much for this!  So last year I paid my estimated taxes in late August, then Sept and then Dec.  I paid enough to get a refund of $1000 at year end.  They accessed a penalty of $90 dollars based on dates past the assigned dates you indicated. The letter was based on days from those dates.  This year I am paying on those dates but the payments are based on what I made at that time because my job can end at anytime.  So the payments are not equal.  My pension and Social Security have the taxes paid each month thru the W4 withholding.  Is this approach ok?  Thanks again for answering my question!

SoCalGal22
Employee Tax Expert

Estimate taxes (1st year in retirement)

Lots of people have income that varies during the year. To avoid the penalty, you have to report all of this by quarter on the tax return, which is harder to keep track of.

 

Here is further information from the IRS explaining how to qualify to have an reduce or remove a penalty.

https://www.irs.gov/payments/underpayment-of-estimated-tax-by-individuals-penalty#:~:text=Remove%20o...

 

I hope that answers your questions. Please feel free to give TurboTax a call anytime if you have additional questions or need assistance.

 

Have a great day!

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SoCalGal22
Employee Tax Expert

Estimate taxes (1st year in retirement)

California taxes all California source income.  If it's a CA property, you still have to report the rent and expenses to CA.

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