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Badger 01-24-2018 05:26 PM

RMD today
 
I made the RMD transfer from my wife's tIRA to her taxable MM account today I'm pretty sure the quarterly IRS payments will cover all taxes this year since it shouldn't be much different that last year but next year with the new tax codes and me taking my first RMD that will be almost 2X that of my wife is a bit difficult to figure out.

Any ideas on how to determine quarterly tax payments for next year?

Cheers!

audreyh1 01-24-2018 06:06 PM

Quote:

Originally Posted by Badger (Post 2002540)
I made the RMD transfer from my wife's tIRA to her taxable MM account today I'm pretty sure the quarterly IRS payments will cover all taxes this year since it shouldn't be much different that last year but next year with the new tax codes and me taking my first RMD that will be almost 2X that of my wife is a bit difficult to figure out.

Any ideas on how to determine quarterly tax payments for next year?

Cheers!

The easiest thing will be to use the safe harbor calculation of paying the prior years taxes, x1.1 if your income is over $150K, in four equal installments. It then doesn’t matter if you owe a bunch that first year there is a big jump in income and taxes. You won’t owe any penalties.

You can alternatively use these estimates for tax withholding from your RMD whether done quarterly or all at once near the end of the year.

The point is you don't have to worry about paying/withholding all (or even 90%) the taxes owed ahead of time the first year you have a big jump in taxable income. The safe harbor rules mean you just have to meet the prior year's taxes (or 110% or the prior year's taxes if higher income) to avoid penalty.

You probably want to set aside funds for the additional you'll owe on April 15 of the following year, so that it's not a nasty surprise.

gerntz 01-24-2018 07:13 PM

Why? Just pay the taxes from the RMD - assuming it's larger than the taxes. Puff! No Q payments.

kaneohe 01-24-2018 07:28 PM

Audrey's safe harbor is a good way. You can also get a good feeling for how much your actual taxes will be by using a tax calculator like HR Block or Taxcaster. They will produce 2017 results burt on the results page there will also be a place where the 2018 results can be accessed. For normal inputs, both calculators will produce the same result. If you have some unusual inputs,they may differ.

meierlde 01-24-2018 07:31 PM

Quote:

Originally Posted by gerntz (Post 2002582)
Why? Just pay the taxes from the RMD - assuming it's larger than the taxes. Puff! No Q payments.

Actually if you take this years taxes, add the additional amount to this years income less dividends and capital gains, then go to the 2018 tax rate schedule, and look at which bracket the total lands you in (the rate schedules for 2018 are posted a number of places on the web). Once you have finished the 2017 return look on line 7 of the qualified dividends and capital gains worksheet, and add the new rmd to it, and calculate the taxes using the rate schedule.


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