estimated taxes

Forum|Forum|4 years ago
March 16, 2022
4 replies
22 views

Due to my RMDs in 2021 and not having enough taken out of my pensions I have to pay a couple of thousand in taxes. I've since adjusted my withholding and will have more taxes taken out of my RMDs for the rest of 2022. Do I really have to pay estimated taxes in 2022? Please tell me I don't...that's going to be a huge whammy.

Not A Product Question

Vanessa A

Level 15

No, if you've adjusted your withholdings to fully cover all of your income so you do not have a payment due at the end of the year, you will not need to pay estimated tax payments.

The following are the exceptions to penalties when filing and owing money:

You paid 100% of your tax liability for the previous year.
You paid 90% of your tax liability for the year you are filing
You had no tax liability the previous year.

This means, if your withholdings have been adjusted to the point that you are paying 100% of your tax liability for 2021, even if you have some taxes due next year, you would not be subject to penalty for underpayment.

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janefromnctaxAuthor

Level 2

I'm not sure that I understand the answer. I have no idea what my tax liability will be for 2021 due to the RMDs, so I don't know if I've adjusted to have enough taken out. How do I get a definitive answer to my situation? Seek out a tax CPA?