Poll: Do You Attempt Over, Under or Pay On The Money With Your Estimated Tax Payments?

[marinauser]

We pay estimated but with smaller payments the first three payments and then calculate the right 4th payment based on dividends and capital gains that are usually siginificant in December as compared to the rest of the year. I usually have to file the form to justify the bigger payment at the end but I have always avoided the penalty. I don't worry about the safe harbor since our income can be vary from year to year.

 

[Original Wally]

That's the way we do it. I think paying quarterly is likely more efficient, but also more w*rk and hassle. It's just easier to do it through withholding on distributions.

We too. I have a spreadsheet to calc the taxes and make sure a distribution in December has anough withheld to get CLOSE to zero. Don't mind $100-$200 either way

 

[rk911]

My choice is not there. We choose the safe haven option every year. Sometimes that results in a refund, sometimes not.

 

[RetiredHappy]

I have a spreadsheet that tracks all income and tax obligations and my preference is to overpay a thousand dollars than underpay a thousand dollars.

 

[Jerry1]

Safe harbor is a critical thing to understand in dealing with estimated tax payments. However, it breaks down a bit if your income is not even. Example, I did a significant Roth conversion in year 2024. I knew that I was not going to do another one in 2025 so I didn't pay in using the safe harbor amount. I would have overpaid significantly. In that case, I used Turbo Tax to model my 2025 estimates by removing the Roth conversion amount and paid estimates based on that income. That worked pretty well and in that case, I tried for a small refund which I just roll forward to next year. It's a never ending stream so I would never take a refund unless I made a big mistake in my estimates.

 

[old medic]

During our working years had extra withheld to cover my sideline work, most years we got a refund. Last year with starting Roth conversions had to learn about quarterly tax. Playing that game this year, but next year will be very simple. Only income will be SS and 2 pensions... Will only have fed and state withheld from my pension to cover 1/12 our tax bill including conversions.

 

[gauss]

The proper way to check your tax account status with the IRS is via the various "tax transcripts" that are available. You can access these directly in real-time if you have an individual irs.gov online account setup. If not, they are also available various legacy channels (ie telephone, lettter etc).

I recently switched from getting refunds each year to having the balanced rolled over to the next year's estimated tax payments. As such, I needed to find a way also to confirm that the IRS had PROCESSED my return. I believe the "account transcript" or preferably the "record of account transcript" contains this info.

Note, also that when I efile, I always document the transmission time/date and the time/date that the efile was officially accepted by the IRS and the corresponding number that is assigned for reference.

-gauss

 

[pacergal]

Taxes are taken from SS and pensions, the last few years, we have received refunds.
If we are having a higher income year, we do Est tax payments, as close as possible.

 

[Midpack]

I assume the OP means the regular monthly estimated payments. I do it once per year in December, and I do a little under. I would rather pay a small amount in April than wait for a refund.

I meant quarterly estimated payments. I assume that's common though not universal here.

 

[GenXguy]

I have no withholding options, while trying to keep MAGI at a minimum, so I'm doing estimated payments, paying based on a higher estimated income so that I'm less likely to owe, and certainly not penalized.

 

[foxfirev5]

With a very simple income tax calculation I'm always confident in the amount I'll owe. Each December I run the numbers and withhold from my IRA an amount slightly higher than 90% of the calculated tax. In March I file a paper return and pay the balance electronically.

 

[COcheesehead]

Dinkytown 1040 is great tool for calculating taxes

 

[ShokWaveRider]

Dinkytown 1040 is great tool for calculating taxes

Does this include the $12k Over 65 BBB Allowance? I could not find it.

 

[COcheesehead]

Does this include the $12k Over 65 BBB Allowance? I could not find it.

There’s an entry for enhanced deduction for seniors

 

[audreyh1]

Paying 110% of prior year taxes often means we overpay. So for the final estimated tax payment due Jan 15, I estimate the taxes that will be due for the whole year and aim for having paid 90% of that. That’s another safe harbor. Being conservative it’s usually 92-93%. I pay the remainder due on April 15.

 

[wmackey]

I typically come in at +/- $25. This year I had ~ $ 700 returned. Mostly due to the changes in tax laws.

 

[RetiredHappy]

We owed about $800 this year because I forgot all about NIIT.

 

[laurence]

I have to pay quarterlies - 1st world problems of the not yet retired. I'm still five figures in the red in April.

 

[scrabbler1]

I do different things for my state return versus my federal return. For my state return, I know with in a dollar or 2 what my tax liability will be by January 15th, when the 4th quarter estimated tax payment is due. I have zero taxes withheld from anything, so I simply pay the total taxes due, raising the amount to the next $10 multiple, rolling the remaining few dollars into the following year. Doing this means I won't have to provide any banking info on my paper return. I have an online account with the state, so paying estimated tax payments is pretty easy.

The federal return is more complicated, and I have done different things over the years and may do something different for 2026. There are too many uncertainties when the 4th quarter estimated tax payment is due January 15th. I don't get my 1099B until January 31st, so I don't know what my qualified dividends will be. Sure, I can estimate them, but some years I am not that close. Furthermore, in the years I get an ACA subsidy, I don't get the 1095-A form until after 1/15. I have tried, with varying degrees of success, to guess what the SLCSP amount will be, among other amounts I don't know beforehand. So, I just pay about half the total best-guess taxes due in January and the rest in April.

I used to have an online account with the IRS, but I lost it when they switched to ID.me and I lack the technology to set up a new account. I did get, for the first time, an IRS transcript for the 2025 year which shows what the IRS knows, including a record of my filed and received 2025 return which included an amount I happened to roll into 2026. I'm not yet sure what I will do for my 2026 taxes now that I am back on the ACA starting in July.

 

[Koolau]

If you wait until the 4th quarter and take it as an RMD with withholding, you can pay almost the exact amount. IRS views it as having been paid equally throughout the year. Seems pretty efficient.

One of the tax tips I learned on this forum.

Yes. Definitely a plus to hanging out here. I now use this hack routinely.

 

[Gumby]

We have withholding from our pensions. We usually try to true things up to be as close as possible in December by doing a Roth conversion to the top of the bracket and withholding enough to get us to zero owe/refund. But due to the changes in the tax laws last year, we got an $1800 refund even with the Roth conversion and zero withholding.

 

[ncbill]

Overpay since I'm doing Roth conversions first of the year.

And my taxes don't get filed by my CPA until October given some past investments that generate K-1 for which I often get corrected K-1s closer to the above deadline.

I will continue to apply any overpayments to the next tax year as long as I'm still doing Roth conversions.

 

[big-papa]

We make quarterly estimated payments and have very good monthly records I keep in a spreadsheet, the outputs of which I feed into a free tax-estimation spreadsheet. We overpay purely for margin reasons.

For dividends thrown off by the stock in our taxable brokerage account, we have no idea what the mix of qualified/199A/nonqualified mix will be until late January/early February, which is after the due date for the last payment. I typically assume, the historical worst case qualified percentage for the fund I own, and that the rest is all nonqualified. But I also assume that it's the same mix each quarter in the year. Last year, that approach just barely avoided a penalty because, as it turns out, the quarter by quarter mix can be lumpy even if I get it right for the whole year - something I hadn't paid attention to before last year.

On a per-quarter basis, I also just add a fixed dollar amount on top of what I calculate is owed, just in case there is any slop or something that I might have missed somehow.

We're getting better at this. The first year, we got about $4K back as a refund and this year it was down to $1K, which as it turns out was very close to the margin I add each quarter. Probably won't push it any farther.

Instructions for DW if I drop in the middle of the year and we haven't yet done all of the Roth conversions we're planning on doing is to not do any more Roth conversions and make a payment that meets safe harbor based on prior year's taxes and just expect a big refund. Then find an accountant to help her proceed for the following years.

Once Roth conversions are finished, which is still years away, we'll come up for air and see what we want to do and whether we'll move to withholdings instead of estimated payments.

Cheers.

 

[ShokWaveRider]

There’s an entry for enhanced deduction for seniors

View attachment 63672

Thanks

 

[latexman]

We withhold taxes from my big pension. We do not withhold from our two smaller pensions (beer money) and DW’s SS. Before I pull from my IRA throughout the year, I run TurboTax to estimate the withholding needed on the withdrawal. Since Fidelity only allows whole numbers on tax rates, I get as close as I can on the underpay side, usually within a few hundred $’s.