I suggest you have the Trustee withhold federal and state income taxes from your RMD instead of paying quarterly estimated taxes. Most people pay ES taxes in four equal installments. The first 3 were due on 4/15, 6/15 and 9/15. While you can use the "annualized method" to calculate any penalties, it's a fairly complicated and cumbersome task. If the taxes were withheld by the Trustee, withholdings are considered paid evenly throughout the year.
We pay ES tax to avoid underpayment penalties. Under the Internal Revenue Code (tax law), there are generally two ways to avoid them. Many states follow the same rules but not always, so check with your state for the rules.
The IRS rules are pasted below. Because it's hard to accurately predict what 90% of this year's total tax will be, most tax preparers recommend paying 100/110% of prior year's total tax (depending on your 2024 Adjusted Gross Income, line 11 for Form 1040). Assuming 2025 is your first RMD year, chances are, your 2025 income will be higher than 2024. If that's true, just make sure your 2025 total withholding will be at least 100/110% of your 2024 total taxes (line 24 of Form 1040).
Underpayment of estimated tax by individuals penalty | Internal Revenue Service
Avoid a penalty
You may avoid the Underpayment of Estimated Tax by Individuals Penalty if:
- Your filed tax return shows you owe less than $1,000 or
- You paid at least 90% of the tax shown on the return for the taxable year or 100% of the tax shown on the return for the prior year, whichever amount is less. If your adjusted gross income (AGI) for 2023 was more than $150,000 ($75,000 if your filing status for 2024 is married filing separately), substitute 110% for 100%.
The IRS urges taxpayers to check into their options to avoid these penalties.
- Check your withholding often and adjust it when your situation changes. To do this fill out a new Form W-4 and give it to your employer. The Tax Withholding Estimator is a helpful tool.
- Estimated tax is the method used to pay tax on income that is not subject to withholding (for example, earnings from self-employment, interest, dividends, rents, alimony, etc.). Use Form 1040-ES to figure and pay estimated taxes on time.
If you still prefer to pay quarterly ES taxes, I recommend you pay it electronically rather than mailing a check. The USPS discourages mailing of checks because of the potential thefts and whitewashing checks. For IRS, go to irs.gov to set up the payments. Use the 100/110% formula to calculate how much you may owe, and pay the entire amount ASAP. There will be some underpayment penalties unless you use the annualized method to calculate your 2025 Form 2210.
