IRA RMD - date affecting penalty

[wizestep]

My RMD is a big piece of my income.  I took it in January 2020.  I have a penalty on my state tax because the program doesn't know that the withholding that was part of the RMD was done early in the year.  Actually my tax payments were front loaded.  Is there any way to fix this without annualizing everything?

[SamS1]

Possibly.  If available, you will need to go to the state return and correct the withholding payment amounts and income to actual received dates showing all withholding in the 1st quarter to calculate the penalty correctly.   Go to the state penalty calculation section of your TurboTax state return to see if you can move those withholding payments to the 1st quarter.  That would push the overpayment from the 1st quarter to the subsequent quarters.  You would also need to show all the RMD income related to the withholding received in the 1st quarter.  If you are going to use actual income and withholding, it may lower your income but again, but it will also pull all your income into the quarters when received.

[macuser_22]

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@wizestep wrote:

My RMD is a big piece of my income.  I took it in January 2020.  I have a penalty on my state tax because the program doesn't know that the withholding that was part of the RMD was done early in the year.  Actually my tax payments were front loaded.  Is there any way to fix this without annualizing everything?

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I don't know what state that is but most states adhere to the Federal rules that W-2 and 1099 withholding is deemed to have been paid through out the year and does not need to be annualized like estimate tax does because of lump sum income peeks in different parts of the year.