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02-12-2019, 06:13 PM
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#21
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Recycles dryer sheets
Join Date: Jul 2008
Location: Sacramento area
Posts: 473
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Let them do it. The "value" you gain really isn't that much. I have found that my coffee habit costs more than fine tuning something like that. Enjoy life and let the small poop go.
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The worst day retired is STILL better than the best day w*rking!
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02-12-2019, 08:38 PM
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#22
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Recycles dryer sheets
Join Date: Aug 2016
Location: Austin
Posts: 182
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Thanks everyone for the helpful perspectives. This is such a great forum! I think I’ll just keep it simple initially and have taxes withheld—one less thing to think about as I ease into retirement...
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02-12-2019, 10:40 PM
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#23
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Thinks s/he gets paid by the post
Join Date: Dec 2018
Location: DuPage County IL
Posts: 2,727
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we opted for no withholding and pay quarterly estimates. takes me maybe 15-20 minutes to set up the automatic payments with the feds and the state. to avoid an underpayment penalty just pay 100% of what you owed last year. thanks to the new tax law we're getting a somewhat unexpected refund this year...first time in forever...so our quarterly estimates will be adjusted accordingly.
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02-12-2019, 11:01 PM
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#24
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Moderator Emeritus
Join Date: Jan 2007
Location: New Orleans
Posts: 47,500
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Quote:
Originally Posted by rk911
we opted for no withholding and pay quarterly estimates. takes me maybe 15-20 minutes to set up the automatic payments with the feds and the state. to avoid an underpayment penalty just pay 100% of what you owed last year. thanks to the new tax law we're getting a somewhat unexpected refund this year...first time in forever...so our quarterly estimates will be adjusted accordingly.
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+1
I do the same. It is simpler for me to just not have any taxes withheld individually from each individual income stream (dividends from taxable investments, RMD's from the TSP, pension, Social Security, …, ) , and instead just take a few minutes once a year to set up automatic payments with the IRS and state for quarterly estimated taxes.
__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities. - - H. Melville, 1851.
Happily retired since 2009, at age 61. Best years of my life by far!
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02-13-2019, 06:38 AM
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#25
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Thinks s/he gets paid by the post
Join Date: Jan 2006
Posts: 4,172
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Quote:
Originally Posted by Austin704
................................. I think I’ll just keep it simple initially and have taxes withheld—one less thing to think about as I ease into retirement...
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This thread reminds me of the autopayment of credit cards one. One less thing to think about..........still in that case you do have to remember to review the individual charges and check that are sufficient funds in the bank acct to pay.........or risk the consequences.
In the case of taxes, you do have to think about whether you are withholding enough from all your income streams........if they all withhold, you're probably ok but if you have significant other sources that don't (like DIV/CG), maybe not.
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02-13-2019, 09:31 AM
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#26
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Thinks s/he gets paid by the post
Join Date: Feb 2012
Posts: 1,495
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Do both. Have let the pension system hold out whatever they think is right, and send in quarterly for the investment earnings. Never had a problem. When hit 70 and take SS and minimum IRA dist hit, will have to refigure.
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02-13-2019, 03:39 PM
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#27
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Full time employment: Posting here.
Join Date: Feb 2018
Location: An Un-Organized Township of Maine
Posts: 801
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My pension still withholds FICA. Otherwise I do not have them withholding anything.
__________________
Retired at 42 and I have been enjoying retirement for 18 years [so far].
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02-13-2019, 04:22 PM
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#28
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Thinks s/he gets paid by the post
Join Date: Mar 2009
Posts: 2,985
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I have a little over 90% off my calculated Fed and state taxes withheld from my annual IRA withdrawal. A single transaction which is very simple and accurate. No withholding on DW's IRA, SS or my small pension.
__________________
Took SS at 62 and hope I live long enough to regret the decision.
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02-13-2019, 04:34 PM
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#29
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Recycles dryer sheets
Join Date: Jul 2008
Location: .
Posts: 398
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Is taking responsibility for paying my own taxes worth the risk and hassle?
I have the amount correlated to the pension and other predictable income taken out. It really is not worth the aggravation for me.
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__________________________________________
"If things go wrong, don't go with them" -Roger Babson
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02-13-2019, 07:06 PM
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#30
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Moderator
Join Date: Oct 2010
Posts: 10,723
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I avoid any withholding all year, then, around Thanksgiving, I get tax software and do my taxes. I have a single page, where I jot down any odd transactions that happen during the year, and I have a list of regular transactions that affect taxes. So by mid December, I have my taxes "done" with a variable for how much tIRA/401k to pull. I tune that figure, then, when I do the withdrawal, I specify the precise amount to withhold so that I end up owing just a few bucks. It's worked well except for when there was a mandatory high withholding rate. But I haven't pulled from that custodian lately, so it's been really easy. Then, come April, taxes are a trivial task.
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02-13-2019, 11:52 PM
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#31
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Thinks s/he gets paid by the post
Join Date: Jun 2016
Posts: 4,663
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Quote:
Originally Posted by Cobra9777
We both have pensions and elected to have no withholding. We have to make quarterly estimated payments anyway due to rental income, investment activity, and Roth conversions in December. So it's no incremental effort. Plus I like to pay the IRS the least amount required, at the last possible moment. We always owe an amount in April, which just barely avoids a penalty for under-withholding. And I frequently use the annualized income method due to large Roth conversions in the fourth quarter.
There are no forms or quarterly filings. I use IRS Direct Pay, which is just like a bank transfer and takes maybe 2 minutes. You can also sign up for EFTPS and schedule your payments in advance.
I must admit, updating my tax estimate spreadsheet every quarter is not a barrel of laughs. But we have enough moving parts that it's a necessary planning activity, especially in 2018 with the tax law changes.
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This is exactly what we are going to do starting this year.
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02-14-2019, 05:47 AM
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#32
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Full time employment: Posting here.
Join Date: Sep 2014
Posts: 645
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Quote:
Originally Posted by AWeinel
Let them do it. The "value" you gain really isn't that much. I have found that my coffee habit costs more than fine tuning something like that. Enjoy life and let the small poop go.
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I too enjoy a good cup of coffee, and doing taxes for 30+ years was enough! take the time to set the withholding once, and then make minor adjustments every year after you prepare your return to get the refund or balance due down.
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02-14-2019, 05:50 AM
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#33
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Thinks s/he gets paid by the post
Join Date: Jul 2015
Location: Beaverton
Posts: 1,382
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I know myself and myself would say withhold
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Jump in, the water's warm.
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02-24-2019, 06:50 PM
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#34
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Thinks s/he gets paid by the post
Join Date: Apr 2008
Posts: 2,024
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Is it ever too late to start tax withholding in a tax year?
We will be paying a large tax bill this year because of the sale of our house in late October 2018. Fortunately, because we forwarded a portion of our 2017 tax refunds (federal and state) to 2018 plus had an additional amount of federal tax withheld from an inherited IRA's RMD taken in December, we met both federal and state safe harbor rules (TurboTax indicates no penalties for us). As a test, I removed the federal taxes withheld from the RMD, and sure enough, there would have been a small penalty.
I have been debating the same question as the OP, whether to set up tax withholding or to pay estimated taxes. Since we moved to Texas last October, we won't need to deal with California income taxes, just federal income taxes. Based on our income for 2019, my rather modest monthly pension has enough to cover my under-65 medical insurance premiums plus have enough to cover our federal tax bill currently estimated for 2019.
The problem is I haven't started the tax withholding for 2019. And given it's February 24th, any changes made now to my pension withholding likely won't be processed until the April pension payment. We will also have the inherited IRA's RMD to help fill in any gap should we fall a bit short by December. Is it too late to start withholding taxes for 2019, forcing us to pay estimated taxes?
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