Taxes

[FedExCourier]

I will get a small pension check monthly and supplement that with 401k money. Would you recommend I go ahead and have the approximate annual tax bill of $4600 taken out of my monthly pension check? Or do you wait until the end of the year and send in a check for your federal taxes? Will I be penalized if I wait until the end of the year to pay my full tax bill?

 

[RunningBum]

In most cases you'll be penalized if you wait until the end of the year. Either do quarterly estimated payments or have it withheld. There are threads on this, including a very recent one, if you search for something like "estimated taxes".

 

[Z3Dreamer]

http://www.early-retirement.org/forums/f28/first-year-for-estimated-taxes-69333.html

 

[sengsational]

Estimated Tax - When do you usually make the fourth payment of the year? - Page 2 - Early Retirement & Financial Independence Community

 

[Gill]

If you have the tax withheld from your 401(k) distribution there is no penalty, even if all the withholding is on December 31. You could also have 1/12 of your projected tax withheld from your pension or even all of it at yearend. Finally you could make four estimated payments of $1,150 each.
Bruce

 

[frayne]

Publication 17 - Your Federal Income Tax (For Individuals) - Tax Withholding and Estimated Tax

 

[Lakedog]

I prefer to have taxes withheld from my pension as I feel it is less trouble than having to worry with quarterly payments. I have online access for changing the fed tax amount so can adjust throughout the year if necessary.

 

[aaronc879]

I prefer to have taxes withheld from my pension as I feel it is less trouble than having to worry with quarterly payments. I have online access for changing the fed tax amount so can adjust throughout the year if necessary.

If I had a pension, this is what i'd do too.

 

[FedExCourier]

I'm kind of leaning towards the pension check having taxes withheld. I will also have my health insurance premium held each month so no hassles with these 2 payments. Thanks for the advice and the threads dealing with taxes.