Another Roth/Tax payment question

[LRDave]

I started my micro-pension this year and DW starts here teachers pension 8/1.

Will we be good having our pension withholdings cancel out our taxes for this year including a Roth conversion? In the case that we have withholdings, does that remove the requirement for quarterly payments?

 

[kaneohe]

Yes, withholding is always superior to quarterly payments since timing of w/h is not considered and w/h is assumed to be timely unlike the estimated payments which need to be paid in equal quarterly payments or paid as income is received and then proved by SchAI of F2210.

 

[gauss]

I started my micro-pension this year and DW starts here teachers pension 8/1.

Will we be good having our pension withholdings cancel out our taxes for this year including a Roth conversion? In the case that we have withholdings, does that remove the requirement for quarterly payments?

You might want to ensure that you have additional Fed and State withholding at the time of your Roth Conversion by your IRA custodian. Your pension withholding will not know about this by default.

P.S. I think Federally, if you w/h at least 100% of last years total Fed taxes due, you will qualify for a safe-harbor for any underwithholding penalties. The percentage goes up above 100% for high-income earners.

-gauss

 

[LRDave]

You might want to ensure that you have additional Fed and State withholding at the time of your Roth Conversion by your IRA custodian. Your pension withholding will not know about this by default.

P.S. I think Federally, if you w/h at least 100% of last years total Fed taxes due, you will qualify for a safe-harbor for any underwithholding penalties. The percentage goes up above 100% for high-income earners.

-gauss

First bolded: Yes I would tune my withholding and tax liability to end in a tie at the end of 12/2020.

Second bolded: Good point - thanks! This gives an unambiguous, simple-to-calculate target for withholdings.

 

[kaneohe]

First bolded: Yes I would tune my withholding and tax liability to end in a tie at the end of 12/2020.

Second bolded: Good point - thanks! This gives an unambiguous, simple-to-calculate target for withholdings.

Depending on whether your income is up or down compared to last yr,
one option may be more advantageous for you. #2 is unambiguous but
#1 may be less.