Making quarterly tax payments to the IRS?

[garyt]

Since my wife retired this year we now are both retired. This will seem like a very basic question but I've never had to consider it before. How do you make quarterly tax payments to the IRS? Do you just send a check to the IRS and note "quarterly tax payment" on the check? And where do you send it?
Also, I don't expect we'll owe any taxes for the next couple years, or very little ( like under a couple hundred bucks). Do we still need to make quarterly payments? Sorry for what are probably very rudimentary questions but it's all new to me.

 

[Alan]

Use this form when sending in your check

https://www.irs.gov/forms-pubs/about-form-1040-es

 

[PaunchyPirate]

Since my wife retired this year we now are both retired. This will seem like a very basic question but I've never had to consider it before. How do you make quarterly tax payments to the IRS? Do you just send a check to the IRS and note "quarterly tax payment" on the check? And where do you send it?
Also, I don't expect we'll owe any taxes for the next couple years, or very little ( like under a couple hundred bucks). Do we still need to make quarterly payments? Sorry for what are probably very rudimentary questions but it's all new to me.

If you’re comfortable with it, there are a couple ways to make your quarterly payments online. I have them automatically deducted from my bank account. I use

https://www.eftps.gov/eftps/index.jsp

If you don’t owe any taxes, you do not need to make estimated payments. I seem to recall that you also don’t need to make payments if you owe under a certain amount, but I’m not sure. Check the IRS instructions.

 

[garyt]

Thanks for the replies

 

[SecondCor521]

I seem to recall that you also don’t need to make payments if you owe under a certain amount, but I’m not sure. Check the IRS instructions.

Correct. The IRS has several safe harbor rules. If you meet those safe harbors then you will not owe an underpayment penalty. The underpayment penalty is pretty much the main reason people do quarterly estimated taxes. (Another minor reason might be to even out cash flow.)

One of the safe harbor rules is that if you owe less than $1,000 when you file your taxes (total taxes owing minus any withholding). There are several other safe harbor rules. Meeting any one or more of the safe harbor rules is sufficient to prevent the assessment of an underpayment penalty.

 

[GravitySucks]

Glad you brought this up.
Not to hijack but....

I just have taxes withheld from IRA withdrawals. Am I going to cause myself an issue not filing quarterly?

 

[Souschef]

If you’re comfortable with it, there are a couple ways to make your quarterly payments online. I have them automatically deducted from my bank account. I use

https://www.eftps.gov/eftps/index.jsp

If you don’t owe any taxes, you do not need to make estimated payments. I seem to recall that you also don’t need to make payments if you owe under a certain amount, but I’m not sure. Check the IRS instructions.

I recommend EFTPS. I have been using them for years. I schedule my payments a few days before they are due, and the payment is deducted from my bank account.
This is what the entry on my account looks like: IRS USATAXPYMT 011121 27014XXXXX(My name).
I also pay my CA estimated tax the same way.

 

[MarieIG]

Use this form when sending in your check

https://www.irs.gov/forms-pubs/about-form-1040-es

I send in this form on a quarterly basis (and another form particular to my State).

They have never had any problem cashing my checks.

Should I have a concern that I underpaid at the end of the year - I would have to take a withdrawal from my IRA and send the entire withdrawal over for taxes (keeping in mind that the withdrawal is taxed as well). In 2020; my entire last few paychecks went to taxes due to a concern regarding under payments/ under withholding.

 

[jollystomper]

You can also pay estimated taxes online at this IRS link: https://www.irs.gov/payments/direct-pay

 

[cathy63]

Glad you brought this up.
Not to hijack but....

I just have taxes withheld from IRA withdrawals. Am I going to cause myself an issue not filing quarterly?

Withholding is treated as if it's done evenly throughout the year, so you will only owe a penalty if you have too little withheld. The easiest safe harbor to reach is to withhold 100% of last year's tax liability (110% if last year's AGI was over $150K).

 

[travelover]

Glad you brought this up.
Not to hijack but....

I just have taxes withheld from IRA withdrawals. Am I going to cause myself an issue not filing quarterly?

No, withholdings are considered to be evenly distributed.

 

[RunningBum]

I like EFTPS because you can schedule payments for all four quarters, and not have to remember to write a check and wonder how long it'll take to get there. Plus you can log in to your account and quickly see what you have paid so far and what you have scheduled.

 

[OldShooter]

...I just have taxes withheld from IRA withdrawals. Am I going to cause myself an issue not filing quarterly?

That works. We withdraw with zero withholding until December, when we draw & 100% withhold enough to cover our safe harbor amount. Nothing quarterly, no mathematics except to figure 110% of last year's taxes and send it in.

 

[Dtail]

That works. We withdraw with zero withholding until December, when we draw & 100% withhold enough to cover our safe harbor amount. Nothing quarterly, no mathematics except to figure 110% of last year's taxes and send it in.

I do the same for my parents and DGF.
No federal tax for me yet.

 

[RetireBy90]

I use turbo tax and they include payment forms for the next year. I know that number change some times by a lot if you do a Roth conversion or cut back on one, so I took 110% of last year tax liability and subtracted with holdings from pensions and SS and send in a check for 1/4 each quarter. Do the same for state taxes. Works easy for me till I run out of checks. When was the last time you ordered checks? Ha

 

[Cobra9777]

When I first retired, I used IRS Direct Pay for quarterlies, which is fast, easy, and requires no advance set-up. A few years later I switched to EFTPS, which is a much better system for tracking and scheduling. I never used checks and paper forms.

Now that I'm 59.5, I just do a December IRA withdrawal with 99% withholding (Fidelity does not allow 100% for some reason). The withdrawal amount is my safe harbor amount for the year, generally 110% of prior year tax. No quarterly payments, no penalties, no Form 2210, and better for cash flow.

Something else I recently learned on this forum is to return the withdrawal to the IRA within 60 days as a rollover. So the IRA withdrawal is not taxable, but the withholding stays. And I ultimately use taxable funds to pay tax, which is my preference since almost all of our tax liability is driven by large Roth conversions.

 

[audreyh1]

We use eftps.gov and schedule payments ahead to be withdrawn on the due date. Works for quarterly estimated tax payments as well as the final 4/15 10490 payment. So much easier than dealing with mail.

If I decide to do equal payments in a given year, I can schedule all at once. You can always go back and cancel and replace if you change your mind up to about 2 days before the payment is due I think.

 

[troutnut1]

alternative to quarterlies

I realized on the last day of 2020 that I would be under-withheld because of some unexpected December stock sales. So I called Fidelity and had them make an IRA withdrawal with 100% of it going to state and federal withholding since I’ve never done quarterlies. I also do withholds from an RMD in the spring each year to cover my basic taxes.

 

[mpeirce]

Learn something every day. 110% huh...

I’ve done 100% as the safe harbor amount in the past, but I guess that I had a lower agi than now. I just topped off my estimated taxes to 100% of last years. Guess there’s a penalty for me this year.

 

[SecondCor521]

Learn something every day. 110% huh...

I’ve done 100% as the safe harbor amount in the past, but I guess that I had a lower agi than now. I just topped off my estimated taxes to 100% of last years. Guess there’s a penalty for me this year.

It depends on your previous year AGI and filing status.

MFJ is $150K. Single and MFS is $75K. I believe HOH is $112.5K. Not sure about qualifying widower.

 

[scrabbler1]

Has anyone here had the problem of usually relying on the 1099-R withholding from an IRA's RMD to help meet a safe harbor provision only to struggle to stay in a
safe harbor this year because the RMD requirement was suspended in 2020? My (snake-bit) friend, whose taxes I do for him, agreed with me that we wouldn't take his annual RMD from an inherited IRA he has. He doesn't need the money for his day-to-day living because he is still working, so taking it only increases his tax bill.

I usually divert a sizable portion (sometimes as large as the maximum 99% Fido allows) to pay some federal and state taxes which help keep him in a safe harbor. This year, we didn't have to do that. He will be in a safe harbor because he will owe about $835, less than the $1,000 max. It seems like a pretty lousy way to stay in a safe harbor, to take an unneeded RMD which will boost one's tax bill.

 

[troutnut1]

Something else I recently learned on this forum is to return the withdrawal to the IRA within 60 days as a rollover. So the IRA withdrawal is not taxable, but the withholding stays. And I ultimately use taxable funds to pay tax, which is my preference since almost all of our tax liability is driven by large Roth conversions.

Thanks for this! I just did this and now I can pay it back.

 

[rk911]

Since my wife retired this year we now are both retired. This will seem like a very basic question but I've never had to consider it before. How do you make quarterly tax payments to the IRS? Do you just send a check to the IRS and note "quarterly tax payment" on the check? And where do you send it?
Also, I don't expect we'll owe any taxes for the next couple years, or very little ( like under a couple hundred bucks). Do we still need to make quarterly payments? Sorry for what are probably very rudimentary questions but it's all new to me.

i schedule automatic electronic bank payments for the feds and my state. to avoid penalties i pay 100% of the taxes paid in the previous years in 4-equal payments.

https://www.eftps.gov/eftps/

 

[mpeirce]

It depends on your previous year AGI and filing status.

Yeah, over 150K agi last year and mfj.

I wonder if I can still top it off more even though it’s after the Jan estimated payment date?

 

[audreyh1]

Yeah, over 150K agi last year and mfj.

I wonder if I can still top it off more even though it’s after the Jan estimated payment date?

Yes, you can still do that.

But if you’re pretty sure you’ve already paid at least 90% of 2020 taxes due you should already be safe and no need to pay more now. You might have to file form 2210 to avoid penalty if the taxes you owe for 2020 are more than you owed for 2019.

They are going to first check quarterly estimated taxes against 2020 taxes owed divided by 4, the against prior year safe harbor if you underpaid. If most of your income came later in the year, particularly Q4, you can probably get a penalty break by using the annualized income method on form 2210.