RMD was not required to take for year 2020, now, w...
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20taxlcbjab
New Member

RMD was not required to take for year 2020, now, we must calculate the estimated tax for 2021 RMD as we will take it and pay what estimated tax amount?

How do we estimate tax for 2021 RMD?
2 Replies
efg4
Level 1

RMD was not required to take for year 2020, now, we must calculate the estimated tax for 2021 RMD as we will take it and pay what estimated tax amount?

In most cases, it shouldn't be necessary to calculate estimated tax on RMDs.  But if RMDs are a large part of your income, you could do it like this: Take the Dec. 31, 2020 balance in your account and divide it by your life-expectancy factor; most people can take them from the table at https://smartasset.com/retirement/rmd-table.  That gives you the amount of your RMD.  Multiply it by your marginal tax rate (find your bracket at https://www.kiplinger.com/taxes/tax-brackets/602222/what-are-the-income-tax-brackets-for-2021-vs-202...), and that gives you an estimate of what your tax will be.  Do not pay it now; it is not due till you file your 2021 tax return in early 2022.

Mike9241
Level 6

RMD was not required to take for year 2020, now, we must calculate the estimated tax for 2021 RMD as we will take it and pay what estimated tax amount?

you have a choice;

calculate the tax for 2021 and then pay in 90% of the tax in quarterly installments 

or

since your 2020 tax will probably be lower than your 2021 tax pay in 100% of the 2020 tax in quarterly installments. if your adjusted gross income was more than $150,000 in 2020 you'll need to pay in 110% of your 2020 tax under this method.  

under the second method you may end up owing a lot come filing time 4/15/2022. if this worries you once you know the required quarterly payments you can always pay in more.

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