Message Font: Serif | Sans-Serif
No. of Recommendations: 0
I missed this thread, being out of town, but since my name has been brought up I'll take the opportunity of making a few corrections and comments, all in good nature so don't get offended, please:
The high-income problem with last year's safe harbor is if LAST YEAR's AGI (not 1999's) is $150,000 use 105% (not 110%) of 1999 taxes.
It's the safe harbors that require 4 equal and on time installments, not the Annualized Method which is specifically used with uneven installments.
Actually, I have never advocated waiting for the LAST December check to overwithhold--always "in December" and often "even earlier if necessary", but I hope anyone reading it gets the point and doesn't wait
'till 12/30 to tell his payroll department to deduct $4,000 from a $2,000 paycheck.

Anyway, in this post paying 100% (or 105%) of 1998 taxes, ALL from withholding ONLY seems to be the best strategy. DON'T make any installment payments because they'll be too late to do any good and will violate the safe harbor rules. Since there's the threat that the 1/4 of the Roth conversion tax is imputed to the first tax quarter, the Annualized Method is out the window, but it doesn't make any difference when the Roth Tax is due if you use the 1998 tax safe harbor.

Hope this helped. Ed
Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.