I Missed June Estimated Tax Payment

[Ian S]

I'll pay it right away and the ones later in the year. The penalty won't be much but is there a way of taking an IRA distribution and having tax withheld from that to avoid the penalty completely? That tax withheld is assumed to have been withheld over the entire year.

 

[Dtail]

Isn't the June estimated payment due by July 15th?

 

[MissMolly]

Isn't the June estimated payment due by July 15th?

They aren’t 3 months apart. First is due in April 18. Second is due June 15. Third is due September 15 and fourth is due January 16.

 

[Ian S]

Isn't the June estimated payment due by July 15th?

Oddly enough, it's June 15.

 

[audreyh1]

It’s only a few days.

 

[Dtail]

Oddly enough, it's June 15.

Okay. Not sure on the IRA withholding counting for a full year, but definitely can use that strategy for an RMD payout.

 

[Exchme]

The penalty is really just interest on the money, so it's annoying but not a huge deal. You may be able to avoid it if you can show on form 2210 which quarter your income occurred vs. your tax payments during the year. Also, as you suggest, you can withhold a large share of an IRA withdrawal (Vanguard limits to 99% withholding) any time during the year and that is deemed to have been paid equally throughout.

After missing the 2Q payment in 2021, the last couple years I put the date in the calendar so I don't forget.

 

[RetiredAndLovingIt]

I missed one of mine by a couple of weeks 2 years ago and only got a $1 penalty at tax time. If I remember correctly my payment was $300-$400 so it might be different for you.
I now go in and schedule all my payments on the IRS website in advance so one less thing to worry about.

 

[RunningBum]

It’s only a few days.

I don't think form 2210 considers it to just be a few days late. If the payment isn't made by June 15 it's considered to be in the next quarter, unless I'm missing something.

 

[jebmke]

Oddly enough, it's June 15.

hence the name "June estimated payment"

 

[jollystomper]

... is there a way of taking an IRA distribution and having tax withheld from that to avoid the penalty completely? That tax withheld is assumed to have been withheld over the entire year.

Yes. That is what I do in lieu of paying of estimated taxes. Just withhold enough to cover the planned tax payment *and* the tax on the amount of the distribution.

 

[Ian S]

I think for now, I'll pay the June payment and not worry about it for now. The penalty will be minimal and I might just avail myself of this "First Time Abate" penalty relief: https://www.irs.gov/payments/penalty-relief-due-to-first-time-abate-or-other-administrative-waiver

 

[Ian S]

Yes. That is what I do in lieu of paying of estimated taxes. Just withhold enough to cover the planned tax payment *and* the tax on the amount of the distribution.

Yes that should work. I guess the only drawback is that I have the cash outside an IRA which I understand is better for paying taxes than paying them from a distribution.

 

[N02L84ER]

If you haven't done an IRA rollover in the past 12 months, I believe you can request an IRA withdrawal, have 99% withheld for taxes, and then within 60 days redeposit 100% of the withdrawal into the IRA.

 

[Dash man]

I paid a large 1st quarter estimated tax payment because of an Roth conversion we made in February. After adjusting our conversion plans for the year, we may not need to pay any more, even with another conversion of $50k planned. The 1st quarter taxes plus withholding on SS and my pension should result in a refund for us because of charitable deductions. I’ll have to fill out the 2210 at tax time.

 

[OldShooter]

I'll pay it right away and the ones later in the year. The penalty won't be much but is there a way of taking an IRA distribution and having tax withheld from that to avoid the penalty completely? That tax withheld is assumed to have been withheld over the entire year.

Yes. It's easy. We have never paid an estimated tax or tried to figure one. Each year in December we take IRA distributions totaling the safe harbor amount and specify 100% withholding. Both Federal and state. (https://www.hrblock.com/tax-center/irs/tax-responsibilities/avoiding-underpayment-tax-penalty/) The key, as you point out is paying from a source of funds where you can have taxes withheld. IRA IOW.

Okay. Not sure on the IRA withholding counting for a full year, but definitely can use that strategy for an RMD payout.

RMD requirement has nothing to do with this. In fact, there is really nothing called an "RMD payout." RMD is simply minimum total amount that you must withdraw during a given tax year.

Yes. That is what I do in lieu of paying of estimated taxes. Just withhold enough to cover the planned tax payment *and* the tax on the amount of the distribution.

Too much work. Just make sure the total of the withholding satisfies one of the safe harbor rules. The distribution amount is simply part of the total IRA withdrawals that you will end up paying taxes on the following April 15.

 

[levindb]

I don't like paying taxes, and I probably never will like it...so, I just don't pay any quarterly payments. We have no taxes taken from our SSA payments either.

In Nov/Dec I calculate my total income and tax liability for the current year. I then have my custodian make a withdrawal in December from our tax deferred accounts with direct payments to the Fed and State...overpaying our calculated Safe Harbor amount. Since that December payment is considered paid throughout the year, there are no quarterly payments due, and I get a refund a few months later in March.

Maybe it is just me, but why would you want to pay taxes 4 times a year?

 

[Dtail]

Yes. It's easy. We have never paid an estimated tax or tried to figure one. Each year in December we take IRA distributions totaling the safe harbor amount and specify 100% withholding. Both Federal and state. (https://www.hrblock.com/tax-center/irs/tax-responsibilities/avoiding-underpayment-tax-penalty/) The key, as you point out is paying from a source of funds where you can have taxes withheld. IRA IOW.

RMD requirement has nothing to do with this. In fact, there is really nothing called an "RMD payout." RMD is simply minimum total amount that you must withdraw during a given tax year.

Too much work. Just make sure the total of the withholding satisfies one of the safe harbor rules. The distribution amount is simply part of the total IRA withdrawals that you will end up paying taxes on the following April 15.

Semantics.
My reference was to withholding enough on the RMD distribution to cover any estimated requirements.
Plus you already know that is what I was referring to.

 

[RunningBum]

I don't like paying taxes, and I probably never will like it...so, I just don't pay any quarterly payments. We have no taxes taken from our SSA payments either.

In Nov/Dec I calculate my total income and tax liability for the current year. I then have my custodian make a withdrawal in December from our tax deferred accounts with direct payments to the Fed and State...overpaying our calculated Safe Harbor amount. Since that December payment is considered paid throughout the year, there are no quarterly payments due, and I get a refund a few months later in March.

Maybe it is just me, but why would you want to pay taxes 4 times a year?

If you would really make that large of a withdrawal from your tax deferred, then this is a great strategy. Otherwise, you are letting your emotions cloud your judgment.

Taxes are a fact of life. So I find the best way to handle them, not put them off until I can no longer avoid them. I do Roth conversions rather than withdrawals. Why would I make a less tax efficient move just to put off paying taxes? Any advantage of keeping money invested throughout the year by waiting to pay taxes is offset by having considerably more money moved to a Roth where it grows tax free forever, isn't it?

I have no other income where withholding is an option. So my only choice is to pay quarterly. It probably takes me 5-10 minutes to set up quarterly payments for the year after I do my taxes. I get a reminder email a couple days before the payment is made so I can make sure I have money in checking, but when I set up the payments I already recorded them in my checkbook register spreadsheet. My only bother is that I have to move the payment rows if I didn't guess right how far down to put them.

Finally, why on earth would you overpay safe harbor and get a refund? That defies all logic.

 

[audreyh1]

I don't think form 2210 considers it to just be a few days late. If the payment isn't made by June 15 it's considered to be in the next quarter, unless I'm missing something.

In TurboTax you give the actual date of payment. I believe the penalty calculation uses those dates.

 

[youbet]

I don't like paying taxes, and I probably never will like it...so, I just don't pay any quarterly payments. We have no taxes taken from our SSA payments either.

In Nov/Dec I calculate my total income and tax liability for the current year. I then have my custodian make a withdrawal in December from our tax deferred accounts with direct payments to the Fed and State...overpaying our calculated Safe Harbor amount. Since that December payment is considered paid throughout the year, there are no quarterly payments due, and I get a refund a few months later in March.

Maybe it is just me, but why would you want to pay taxes 4 times a year?

I do it the same way but I don't have anything withheld beyond the safe harbor amount. I generally wind up paying taxes twice a year: once in December as withholding and once in March as taxes due.

I didn't find estimated payments to be difficult when I did things that way. But this method is the simplist for me now.

 

[youbet]

In TurboTax you give the actual date of payment. I believe the penalty calculation uses those dates.

Based on my experience of sending the June est payment late by a few days a while back, similar to OP, I think RunningBum is correct. You give the date of payment and TurboTax uses that date to determine which quarter to apply it to. Miss June 15th, and those dollars are applied to the third quarter.

Maybe one of our tax knowledgeable members will chime in.

 

[ownyourfuture]

After missing the 2Q payment in 2021, the last couple years I put the date in the calendar so I don't forget.

Bought my first cell phone in 2007. A palm treo 755P
No longer use it as a phone, but I've got quarterly estimated tax reminders entered going out to 2030

 

[rk911]

I missed one of mine by a couple of weeks 2 years ago and only got a $1 penalty at tax time. If I remember correctly my payment was $300-$400 so it might be different for you.
I now go in and schedule all my payments on the IRS website in advance so one less thing to worry about.

We do the same thing only we the EFTPS website. Set it and forget it.

 

[marko]

I don't like paying taxes, and I probably never will like it...so, I just don't pay any quarterly payments. We have no taxes taken from our SSA payments either.

I've been supposed to pay quarterlies since I was 17 years old. That was 54 years ago.

Never paid them, can't be bothered. Don't care about the penalty, don't even know how much it is.

I want to think about taxes one day a year. Send me the bill at tax time and I write one check.