Estimated taxes question

[Socket1021]

This question is for my 95-year-old dad.  He has about $40,000 in annual income from his pension and Social Security.  This year, he had to withdraw money from his mutual funds (through Muriel Siebert) to pay expenses for home health aides.  (He has an IRA, but did not make any withdrawals from it.) The amount will be about $150,000 for the year.

How much should he be paying in estimated taxes on the withdrawals?  The Siebert statement says that he has a long-term capital loss of about $1500, but should he be paying 20% on the $150,000?  TYIA.

[VolvoGirl]

For the Mutual Funds,  you only pay tax on the total Net Gain or Loss, not the proceeds.  Was the  $1,500 long term loss for the whole account?  To figure the gain or loss  you have to subtract your basis (original cost) from each sale.    Plus if you reinvested the dividends and bought more stock or shares you need to add the dividends to your cost basis so you don't pay tax on them again.  The fund should be keeping track of all that for you.    Has he been reporting the dividends each year?  

Then about the IRA.  Is it a Traditional IRA or a ROTH IRA?   Since he is 95 he should have been taking the RMD Required Min Distribution each year when he turned 70 1/2.   When did he start the IRA account?  The IRA plan should  be sending him a letter or form 5498 for the RMD amount to take at the beginning of each year.  

[Mike9241]

What type of IRA? At his age, he is required to take minimum distributions from it each year (RMD). The exception is if it's a ROTH IRA, which if it was started 5 or more ago (I'll use the term qualified Roth), distributions are generally tax-free. 

If it is not a qualified Roth and he hasn't been taking annual RMDs, see a tax pro because he has a huge tax issue. 

assuming he doesn't have any of these situations, 

the minimum estimated tax payments

would need to be the lower of

a)100% of his 2025 tax (assuming 2025 adjusted gross income was under $150,000, otherwise it's 110%) or

b) 90% of 2026 tax.

[Socket1021]

He has been received 1099s from Muriel Siebert every year reporting the dividends, etc. and everything was reported on his return.  No issues there. 

I just re-checked the last quarterly statement from Siebert, and it only shows the small capital loss.  I will have to call them to find out more information.  I will make sure that the estimated taxes are within the safe harbor.

He has a traditional IRA and has been making the RMDs every year.  No issues there.  That's the good news.

Thank you for the help. I will contact an accountant to make sure that the 2026 return is done properly.

[Socket1021]

All RMDs from his traditional IRS were made and reported to the IRS properly.

I will try to get more information from Siebert about the gains/losses for the year and contact a tax accountant to ensure that the return gets done properly for this year.  He will also be selling his home, which has a reverse mortgage on it (of course).  That's too complicated for me.

Thank you for reminding me about the safe harbor.  I will adjust his estimated tax payments accordingly, and probably add something to avoid a big bite next April.

Your prompt response is much appreciated.