What day in December is good to calculate taxes?

[audreyh1]

I have mostly Fidelity funds and none of my other funds tell me estimated qualified dividends either, however using the prior year ratios for each fund I come very very close to the final qualified dividends. Certainly good enough for the Jan 15 deadline.

Looks like this year I will be using 2023 taxes safe harbor anyway.

 

[RunningBum]

Will all capital gains distributions and dividends be declared by 10 days before the end of December?

In my estimated tax payments I've planned on a certain amount of capital gains but I have left some room for the funds in my taxable account to potentially have cap gain distributions. If none happen (none have happened for the last two years) what day in December would I be able to know I can sell some stock to use up the rest of my budgeted cap gains?

Look at the specific funds you own and see when the actual distribution numbers will be announced. For the VG funds I hold, last year the ex-div date was 12/21, record date 12/22, and payable date 12/27. It could be different this year.

I do a similar top off at the end of the year. Roth conversion for me. From the estimates given earlier in the month I have a good idea how much it will be, but I don't dial it in until I see the actual numbers. I usually wait until the payable date just to make sure because it really doesn't matter to me if I do the final conversion on 12/23 or 12/28. I have a spreadsheet where I record the actual income received throughout the year so I'm not having to scramble late in the year and possibly leave something out.

When there was an ACA cliff I would start sweating around this time, but with no cliff there is less stress. Next year I get to consider IRMAA as well but I usually fall well below the end of the first tier.

 

[audreyh1]

This year 12/27 is a Friday, then 12/30 Monday, 12/31 Tuesday. So you probably want to do things on the Friday 12/27 at the latest assuming the same brokerage.

 

[Souschef]

My main driver is my RMD. I wait until the first business day in January to get my 12/31 balance on my IRA's.
I can then calculate my RMD and work out the withdrawals throughout the year.

 

[Rianne]

Does the IRS care where/when tax payments are due. For instance, I cash an iBond (interest accrued $10k) in January 2025. Sell stock in first quarter and take a tIRA w/d in first quarter. Can I withhold all taxes from the tIRA w/d? We also have $60k SS. At the end of the year my taxes will have been payed for all income in the first quarter. Is there a reason for quarterly payments if all done at once?

 

[audreyh1]

Does the IRS care where/when tax payments are due. For instance, I cash an iBond (interest accrued $10k) in January 2025. Sell stock in first quarter and take a tIRA w/d in first quarter. Can I withhold all taxes from the tIRA w/d? We also have $60k SS. At the end of the year my taxes will have been payed for all income in the first quarter. Is there a reason for quarterly payments if all done at once?

Does the IRS care within a given year when you withhold taxes - no.

Only if you pay estimated taxes do you have to file Form 2210 if you don’t pay enough (safe harbor) per quarter.

Do you also have withholding on your SS payments?

It’s also perfectly fine to pay the whole year’s estimated taxes in Q1/April 15. DH used to do that.

 

[Souschef]

I wait until the first business day in January to see what the final balance is on my IRA;s. I plug the numbers into a spreadsheet that automatically calculates my RMD.
If necessary, I will change my January estimated tax payment. I have never had to do it so far.

 

[Rianne]

Does the IRS care within a given year when you withhold taxes - no.

Only if you pay estimated taxes do you have to file Form 2210 if you don’t pay enough (safe harbor) per quarter.

Do you also have withholding on your SS payments?

It’s also perfectly fine to pay the whole year’s estimated taxes in Q1/April 15. DH used to do that.

I do not withhold for SS. If I figure that income with all other income and make one payment via tIRA w/d when we Roth convert. I figure entire income for the year, including dividends, interest, SS, tIRA w/d, stock sales and plug those #s in my software. Then see what the tax is. Then re-enter the tIRA withdraw withholding with that tax amount. It all comes out in the wash, right? There's no having to figure each income individually.

 

[audreyh1]

OK - in your initial post you specifically mentioned income in the first quarter. Certainly if you’ve figured out total expected income and taxes for the year and withhold that during your Roth conversion, that works.