Tax Question re: Quarterly estimated tax payments

[audreyh1]

I'm the original poster.

As Kaneohe and others have suggested, I'm taking a crack at filling out the 2210 form. It's actually worse than doing my taxes four times, because when I did the taxes, everything was loaded in automatically.

In contrast, when filling out the 2210 form, I have to go back to each of four separate taxable accounts and recreate each quarter's income. And it has to be categorized as dividends, interest, short term and long term capital gains.

I haven't been able to figure out how to get the capital gains by quarter in the Fidelity account.

This has been a good lesson. Either four equal quarterly payments, or have the taxes withheld from the IRA distributions.

Fidelity has dates associated with every transaction including capital gains distributions and realized capital gains from selling something.

Fidelity has detailed year to date tax information collected for you to view throughout the year. Found under the More..... tab for a given account. The only things that aren’t generally available until after Jan of the following year so too late for estimated taxes are qualified dividend and foreign taxes paid information.

 

[Involuntary Retiree]

With regard to withholding from Roth conversions at Vanguard: I have done TIRA to Roth conversions for the past several years in my Vanguard account, and there has never been any option for withholding on any of them on the conversion screen. Others on this forum have reported that they have successfully directed Vanguard to withhold on such conversions. Hmmmm. The info seems inconsistent.

Although I have not called and confirmed, I have surmised that, since I have not yet reached the age of 59.5, any withholding might be considered an early distribution to the taxing authorities, and would be subject to a penalty. Thus, Vanguard's conversion screen doesn't give me the option to withhold.

It's just a guess, but it would explain what appears to be Vanguard's apparent inconsistent treatment of its account holders.

 

[kaneohe]

Thoughts from Alan S. of fairmark.com. I believe they confirm my guesses.
https://fairmark.com/forum/topic/wi...version-then-replacing-w-h-in-tira/#post-3252

 

[Slow But Steady]

Do you qualify for that waiver? Doesn't that get you off the hook for paying the penalty?

It looks like I qualify for the waiver. Since they have already taken the penalty out of my refund, I think the best way to get it would be to file an amended return and include the 2210 form.

Thanks for bringing this to my attention.

 

[kaneohe]

It looks like I qualify for the waiver. Since they have already taken the penalty out of my refund, I think the best way to get it would be to file an amended return and include the 2210 form.

Thanks for bringing this to my attention.

Great news! a combo........a good lesson for future yrs. plus a one-time
money back deal. Thanks for update.

 

[scrinch]

In addition, amounts withheld from IRA distributions for taxes are considered paid evenly throughout the year, even if made in a lump sum payment at year-end. This is my strategy for the next few years since I have an inherited IRA that requires me to take RMDs even though I’m not yet age 70.5.

+1

I have Fidelity withhold almost all of my inherited IRA RMD for state and federal taxes. That's easier than remembering to make estimated quarterly tax payments to the feds and the state.

 

[scrinch]

I'm the original poster.



As Kaneohe and others have suggested, I'm taking a crack at filling out the 2210 form. It's actually worse than doing my taxes four times, because when I did the taxes, everything was loaded in automatically.



In contrast, when filling out the 2210 form, I have to go back to each of four separate taxable accounts and recreate each quarter's income. And it has to be categorized as dividends, interest, short term and long term capital gains.



I haven't been able to figure out how to get the capital gains by quarter in the Fidelity account.



This has been a good lesson. Either four equal quarterly payments, or have the taxes withheld from the IRA distributions.

I learned just this lesson in just this way. After I spent most of a weekend day wrestling with the 2210, I gave up on the $250 penalty and said "never again."

 

[gooddog]

Runingbum has the correct answer. The IRS assumes even distribution of income throughout the year, and thus believe there should be even payment of tax. It can be clarified with the IRS.