Message Font: Serif | Sans-Serif
 
No. of Recommendations: 0
My wife and I are retired. As of today, and at least until December 2012, I have had more funds withheld from my Social Security payments than needed to settle my income tax bill next April. But in Q4, I will have substantial taxable income (mandatory IRA withdraw from my IRA and probably a partial Roth conversion from my wife's IRA).

The tax prep software says pay $X each quarter. I can do that, but wonder if there is any reason to or penalty for waiting since all the income that will cause the need for payment actually will happen in December.

Gordon
Atlanta
Print the post Back To Top
No. of Recommendations: 4
My wife and I are retired. As of today, and at least until December 2012, I have had more funds withheld from my Social Security payments than needed to settle my income tax bill next April. But in Q4, I will have substantial taxable income (mandatory IRA withdraw from my IRA and probably a partial Roth conversion from my wife's IRA).

The tax prep software says pay $X each quarter. I can do that, but wonder if there is any reason to or penalty for waiting since all the income that will cause the need for payment actually will happen in December.


The tax prep software says pay $X each quarter because either you didn't use the tools to calculate estimates using annualized income or they weren't included in the software you are using. You do not have to pay estimated taxes until you have received the income being taxed, so you can wait until the final estimate to pay any additional tax due on income received in Q4. You might want to look online for an annualized income estimated tax calculator. Among others, edcosoft, who posts here occasionally, makes a good one.

Ira
Print the post Back To Top
Advertisement