Do you withhold taxes on dividends?

[Kelor]

I'm just curious what some other people do. Do you withhold taxes on your investment dividends? Or do you do quarterly estimates?

Thanks!

 

[Amethyst]

Most of our income is from pensions, so we have extra taxes withheld from those to cover investment income. We have Vanguard w/h tax from Mr. A.'s yearly RMD.

I'm just curious what some other people do. Do you withhold taxes on your investment dividends? Or do you do quarterly estimates?

Thanks!

 

[pb4uski]

No. In late December I estimate what my total tax for the year will be and I then do a tIRA withdrawal with high withholdings for federal and state income taxes to make estimated tax payments.... but because these taxes are paid in the form of withholdings the IRS considers it as having been done ratably throughout the year for the purpose of underpayment penalties even though it happens in December.

 

[jimbee]

No, I do it the same way as pb4uski.

 

[audreyh1]

Are you asking about having the brokerage withhold taxes for you? I don’t think that’s and option on taxable accounts.

I set aside funds to pay estimated taxes each year in a high yield savings account, plus an estimate of what I will owe April 15. I set these aside when I make my annual withdrawal, then they are available to pay taxes throughout the year.

 

[aja8888]

I'm doing RMD's (5 years now) and between those and SS, I estimate next year's tax bill (Fed) and set up 4 estimated tax payments through the online EFTPS site. Like Audreyh1, I pay from a high yield savings account.

I don't pay state income tax (Texas).

 

[bingybear]

I do estimated taxes. Most of my taxes now are due to significant roth conversions. I may change what I do when that phase is over.

 

[Souschef]

I'm doing RMD's (5 years now) and between those and SS, I estimate next year's tax bill (Fed) and set up 4 estimated tax payments through the online EFTPS site. Like Audreyh1, I pay from a high yield savings account.

I don't pay state income tax (Texas).

Same for me, except I use part of my RMD's to pay estimated taxes, both state and federal. I live in California, and it is my rent payment for being able to live here.

 

[davebarnes]

Yes.
I look at my monthly Fido statement and then put 20% into my estimated taxes bucket.
This is my first year doing this so I will see how it goes.

 

[W2R]

I don't withhold on anything. I do quarterly estimated taxes on all my income sources. For me, that's simpler than withholding from some income and sending in estimated taxes for other income.

 

[Katsmeow]

No. In late December I estimate what my total tax for the year will be and I then do a tIRA withdrawal with high withholdings for federal and state income taxes to make estimated tax payments.... but because these taxes are paid in the form of withholdings the IRS considers it as having been done ratably throughout the year for the purpose of underpayment penalties even though it happens in December.

Pretty much this. I occasionally during the year do tax withholding on some IRA income. Then in December I make sure that I have withheld enough for the entire year.

 

[rk911]

I'm just curious what some other people do. Do you withhold taxes on your investment dividends? Or do you do quarterly estimates?

Thanks!

quarterly payments based on 100% of the previous year's tax bill/4. we live on our pensions and sock away social security and other minor income streams for those payments. simple, EZ and stress free.

 

[mrfeh]

Estimated taxes quarterly.

 

[RunningBum]

Are you asking about having the brokerage withhold taxes for you? I don’t think that’s and option on taxable accounts.

I looked on Vanguard and didn't see an option. I make estimated quarterly payments.

 

[HarveyS]

I like pb4ski's method, and will remember that. Right now, I'm not taking RMD's so I make quarterly payments.

 

[Alan]

I used to do similar to pb4 but the last 3 years I have become lazy and simply do quarterly estimated payments on the schedule that TurboTax spits out to ensure I make safe harbour and incur no penalties.

 

[jollystomper]

No. In late December I estimate what my total tax for the year will be and I then do a tIRA withdrawal with high withholdings for federal and state income taxes to make estimated tax payments.... but because these taxes are paid in the form of withholdings the IRS considers it as having been done ratably throughout the year for the purpose of underpayment penalties even though it happens in December.

I id this last year for the first time, the only difference is that I spread out the "tax withdrawals" just because I did not want to take out a large amount all at once. Sort of a "dollar cost average withdrawal" process.

 

[cathy63]

We don't have any source of income that could be withheld from, so I just divide last year's tax bill by 4 and pay it as estimated taxes.

 

[ShokWaveRider]

Recently we have been keeping our MAGI as low as possible for ACA. It is hard to estimate exactly each year so I do not bother. Ever since the ACA's inception, I have had to pay taxes in April but never withheld and never had a penalty.

 

[newtoseattle]

can you make a single end of year extra payment?

I am still employed and just have my employer hold out a bit more taxes. It usually works. But I ended up with a much larger paycheck for december b/c of overtime. So I'm estimating I owe 3-4 thousand extra in taxes. Can I make a single extra "quarterly" tax payment by january deadline to avoid some of the penalty?

I'm not sure how the ES form would work since most of taxes are paid throughout year?

 

[Midpack]

Like almost everyone else above, I don't do withholding on anything and do quarterly estimated payments. The only quarter where I look closely is the 4th, as long as I'm in the ballpark on the 1st, 2nd and 3rd I can adjust with the 4th. Now that I have started Roth conversions, even though I'll do one relatively large distribution>conversion in Dec, I am considering just doing equal quarterly estimated payments with a closer look 4th quarter.

 

[scrabbler1]

Unless I get a large cap gains distribution midyear, I don't make any estimated tax payments until the 4th quarter. At the start of the year, I expect the ACA subsidy to cover most or all of my taxes due. If I don't go over the cliff, it works out fine. If I go over the cliff, it is because I got a large distribution at the end of the year, so I pay some estimated taxes in Q4. In some ACA years, when I was getting a subsidy, I'd simply pay some of the remaining balance and pay the rest in April. Never had a problem.


Remember, the estimated tax "quarters" aren't all the same length. Instead of 3-3-3-3 months, they are actually 3-2-3-4 months. Combine the added length of the 4th "quarter" with the fact that a larger part of my investment income is near the end of the year, and I end up with 40%-60% of my income in the 4th "quarter."

 

[Bir48die]

I over withhold on my deferred comp each year to cover my CG’s and dividends

 

[Chuckanut]

Most of our income is from pensions, so we have extra taxes withheld from those to cover investment income. We have Vanguard w/h tax from Mr. A.'s yearly RMD.

+1

I have upped the withholding on my [-]Solid Gold Platinum plated[/-] Brass and Wood pension plan. It's the easiest way to to avoid underpayment to the point of being penalized.

i

 

[gwraigty]

DH still works, so we increase his paycheck withholding to account for our taxable investment income.