Estimated tax payments

[FIYes]

I have never done estimated tax payments. I have had taxes withheld from my pension and from DH’s social security. This year, I am considering a larger than usual Roth conversion and don’t want to get in a situation where I have significantly underwithheld/underpaid my taxes. I generally try to set withholding so that I am within a couple of hundred dollars of tax liability. The couple of hundred can go either way…over or under and I am happy with that.

I don’t want to get locked into quarterly payments. I just want to pay the IRS the liability that will follow a larger than usual conversion. I will be staying in the same tax bracket. I have a great deal of room in this tax bracket and realize that converting a couple of thousand dollars per year isn’t making much difference.

Any advice from folks who have done this?

 

[braumeister]

One little trick that some use is to wait to do your final conversion near the end of the year. By then you should know roughly what your tax liability is, so you can have what you need withheld from the conversion.

Anything withheld from anywhere is considered to have been paid equally throughout the year, so there's no issue of quarterly payments involved.

 

[Dash man]

The IRS has a Direct Pay site online that would work.

https://www.irs.gov/payments

 

[RunningBum]

I've been using EFTPS for years. https://www.eftps.gov/eftps/
I don't remember difficulties setting it up. Now I can set up quarterly payments for the year and adjust them if needed. I try to do even quarterly payments so that I don't have to file the tax form (2210, I think) to show income and payments in each quarter to prove I made payments at the right time.

I don't do withholding on Roth conversions because I'd rather convert the entire amount and pay taxes from my taxable account. Also, I know this doesn't apply to you since you are talking about SS, but if you are under 59.5 the withholding is a withdrawal that you'll pay an early withdrawal penalty on.

 

[RockyMtn]

If you have it withheld from the Roth conversion you aren't maximizing the conversion. You are better off paying through EFTPS with after tax dollars.

 

[qwerty3656]

If you have it withheld from the Roth conversion you aren't maximizing the conversion. You are better off paying through EFTPS with after tax dollars.

That only makes sense if you have a bunch of non-IRA money. If you're living off your IRA money, you really don't have an option.

 

[FIYes]

I won’t have the money withheld when I do the conversion. Taxes will come from funds in a taxable account. I don’t see the advantage to a conversion unless the funds to pay the taxes come from a taxable account.

 

[RockyMtn]

That only makes sense if you have a bunch of non-IRA money. If you're living off your IRA money, you really don't have an option.

Yes that makes absolute sense.

 

[SevenUp]

If you withhold enough to fit into any of the Safe harbors then there will be no underpayment penalty.

 

[CardsFan]

If you withhold enough to fit into any of the Safe harbors then there will be no underpayment penalty.

This.

Makes it easy. Don''t need to look at this year, only last year. Now, if you expect income to go down significantly, that's different. But if it is going up, this is the way to do it.

 

[ownyourfuture]

I've been using EFTPS for years. https://www.eftps.gov/eftps/

Since I retired in 2015, I've been paying via personal check & snail mail.
I clicked on the link you provided & noticed there's a number you can call to make a payment.

The Electronic Federal Tax Payment System® tax payment service is provided free by the U.S. Department of the Treasury. After you've enrolled and received your credentials, you can pay any tax due to the Internal Revenue Service (IRS) using this system.

I would be interested in paying over the phone without enrolling. The following makes it sound as if you have to be.
You must be enrolled to use the EFTPS® tax payment service.

On the other hand, this quote from the website makes it sound as if you don't have to be ?
Please note: Your tax payment is due regardless of this Web site's availability. You can always make a tax payment by calling our voice response system at 1.800.555.3453. Follow the prompts to make your payment.

 

[MarieIG]

Yes I have. I print out the vouchers/forms (for me state and federal), and get them (and the payment) in the mail by the due date for the quarter in which the "income" is generated.