LXEX55
Recycles dryer sheets
I am not yet retired. I was under the impression that we only had to meet one tax deadline per year. Am I wrong? Can someone please explain the basics of estimated taxes in retirement?
I am not yet retired. I was under the impression that we only had to meet one tax deadline per year. Am I wrong? Can someone please explain the basics of estimated taxes in retirement?
I am not yet retired. I was under the impression that we only had to meet one tax deadline per year. Am I wrong? Can someone please explain the basics of estimated taxes in retirement?
The federal government is worried about mental decline with the elderly so they come up with these little brain teasers for us all to solve every year. It is ostensibly about taxes but it is really to keep their Medicare costs down by stimulating our aging brains.
Our plan is quite simple. My accountant gives me printouts in April of what I'm supposed to pay in estimateds and we throw them away.
While we're supposed to, we don't pay estimates and just pay the penalty at tax time.
Our plan is quite simple. My accountant gives me printouts in April of what I'm supposed to pay in estimateds and we throw them away.
While we're supposed to, we don't pay estimates and just pay the penalty at tax time.
Well we do pay upfront withholdings on our IRA withdrawals so it's just a couple hundred bucks penalty. I don't know the percentage.Out of curiosity, how large is the penalty, as percent of taxes owed?
Our plan is quite simple. My accountant gives me printouts in April of what I'm supposed to pay in estimateds and we throw them away.
While we're supposed to, we don't pay estimates and just pay the penalty at tax time.
Well we do pay upfront withholdings on our IRA withdrawals so it's just a couple hundred bucks penalty. I don't know the percentage.
This works for me, too.Our situation is blessedly simple: All our assets are in IRAs or Roths. Late in every year we figure our "safe harbor" estimated tax payment, which is based on our prior year taxes. Then we withdraw from the IRAs that amount and have 100% withheld. That year-end payment, since it is withholding, is considered by the IRS to have been paid during the year so we are at no risk for not making quarterly estimated tax payments.
Well we do pay upfront withholdings on our IRA withdrawals so it's just a couple hundred bucks penalty. I don't know the percentage.
Late in every year we figure our "safe harbor" estimated tax payment, which is based on our prior year taxes. Then we withdraw from the IRAs that amount and have 100% withheld. That year-end payment, since it is withholding, is considered by the IRS to have been paid during the year so we are at no risk for not making quarterly estimated tax payments.
Our situation is blessedly simple: All our assets are in IRAs or Roths. Late in every year we figure our "safe harbor" estimated tax payment, which is based on our prior year taxes. Then we withdraw from the IRAs that amount and have 100% withheld. That year-end payment, since it is withholding, is considered by the IRS to have been paid during the year so we are at no risk for not making quarterly estimated tax payments.
If we are invested and the market goes up during the year, we profit on the government's money. If someone does not want to take this risk, just sell equities earlier and put the money into t-bills, CDs, MMF, etc inside the IRAs until it is withdrawn at the end of the year. Then you make less money on the government's money but it is less risky.
Does this also apply if you have other income such as SS and K-1, although most of our income is from RMD and annuitized IRA. We pay estimated taxes, but it would be so much easier to pull the safe harbor amount from our November RMD withdrawal.
"just a couple hundred bucks penalty"....YIKES. That's not really the penalty for not paying estimated is it? There are members on this board that would KILL for free Turbotax and here you are throwing a couple hundred bucks away on penalties? Naw, can't be true.
Like OS, I don't do quarterlies...one less "account" that I'd feel compelled to track if I did pay quarterly. Instead, I "do my taxes" in November/December and in my case, I can get very close to my final tax return. I pull enough after-tax funds to last me through the upcoming year and I set the withholding such that it slightly exceeds what I will owe. This allows me to make sure I'm getting the expected PTC too, without getting near the cliff. There was a case a few years ago where the plan administrator forced a high withholding rate on me, so nothing I could do there but file early and get the big refund ASAP. But last year, everything went according to plan.That year-end payment, since it is withholding, is considered by the IRS to have been paid during the year so we are at no risk for not making quarterly estimated tax payments.