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I have reached the point in life where I have converted all my human capital to real capital.

All my life I have had a had a paycheck with the appropriate taxes taken. I have adjusted my withholding to accommodate any changes in my taxable accounts.

Since retiring, I have adjusted the amount of taxes withheld when I make my annual RMD and the taxes are paid at the time of the withdrawal. Without any unplanned adjustments to my taxable accounts, no additional taxes are owed.

I rarely make changes in the taxable accounts. Now when I make any changes in my taxable accounts, I have no regular means to make tax payments over the year and seems to force me into estimated payments. After reading the IRS “help” on the subject, it seems that I will be forced into adjusting the estimated tax payment using form 1040-ES if I make any unplanned changes in the taxable account. Wish I could just pay the taxes when I make the changes.

Am I missing something?
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Since retiring, I have adjusted the amount of taxes withheld when I make my annual RMD and the taxes are paid at the time of the withdrawal. Without any unplanned adjustments to my taxable accounts, no additional taxes are owed.

I rarely make changes in the taxable accounts. Now when I make any changes in my taxable accounts, I have no regular means to make tax payments over the year and seems to force me into estimated payments. After reading the IRS “help” on the subject, it seems that I will be forced into adjusting the estimated tax payment using form 1040-ES if I make any unplanned changes in the taxable account. Wish I could just pay the taxes when I make the changes.


You could just have more of your RMD withheld, or take an additional distribution from your IRA. You can often even have a withdrawal that goes 99% or 100% to withholding.

If you don't want to do that, and you want to have taxes withheld from your taxable account, you should ask your broker if it can be done. Because there are some people who are required to have taxes withheld when they make sales of stock, brokers generally have a way to process withholdings from taxable accounts, but it's not something that people commonly want - so you generally have to ask for it.

AJ
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Now when I make any changes in my taxable accounts, I have no regular means to make tax payments over the year and seems to force me into estimated payments

You may not have to make estimated payments.
If the taxes that are withheld are at least 100% of the previous years income tax (110% if AGI > $150K for MFJ) then you fall in the "Safe harbor".
If you are in that safe harbor (or one of the other possible safe harbor cases) you still will owe the taxes and have to pay them when you file your taxes the following year. But you won't owe any interest or underpayment penalties.

SO - if I were in your position, I'd probably NOT make estimated payments (nor have money taken as withholding from may taxable account). Instead I'd make sure my RMD's withholding would be enough to put me in the safe harbor. Then come April 2021 I'd pay whatever additional amount I'd owe when I did my taxes for the 2020 year. Even if I only get 0.5% interest on that money from now until April 2021, that's still a few bucks more in my pocket.

But if you want to pay the IRS estimated taxes - or do some additional withholding, you can certainly do that.
AFAIK there's nothing that prevents you from making multiple estimated tax payments so you could even do it as a pay-as-you-go thing, sending the IRS a check (or ACH) every month, covering the taxes you guesstimate will be the result of your portfolio changes that month. (it wouldn't be my choice or my advice to do that - but you can do that if that makes you sleep better at night)
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While we technically are using form 1040-ES, we never touch a piece of paper or an envelope for our tax payments. We make the actual payment through the https://www.eftps.gov system. (This is one way people who had not paid taxes could give the IRS their banking information for the recent stimulus payments according to my CPA.) While the debit happens to our checking account, the actual source of funds happens to be our portfolio.
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It may just be a matter of semantics, but you are having taxes withheld at the time of withdrawal. You are not paying your taxes then.Your taxes are not paid until your tax return is filed when the tax due is calculated and withholding is subtracted to determine if you have to pay more or will get a refund.
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Using the https://www.eftps.gov/ site to make tax payments is very flexible and simple. No Estimated Tax form to file or update.

You can just set up your account linked to a bank account, and then set up 4 tax payments on the "required" dates or any dates you pick. You just enter the amount you want to pay on each date.

If you need to change a payment (up, down or just cancel), you can do that at any time before a payment is actually processed.

Even if you don't set up scheduled quarterly payments, you can also use the account to just make a special payment, if you have the need based on a change in income.

Want to pay another $1000 next week? Just open your account and fill in the amount and the desired date, and payment will be made next week. If you decide tomorrow that the payment isn't needed, then cancel it.
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Using the https://www.eftps.gov/ site to make tax payments is very flexible and simple

It is but I will be sending what I owed for 2019 as a check in an envelope with the address handwritten and I hope it takes them a long time to get to it ;)

It will be one of a handful of checks I have written this year - the one bright spot in my taxes in that my current locality allows property taxes to be paid by credit card with no fee so at least I saved 2% there.
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You may not have to make estimated payments.
If the taxes that are withheld are at least 100% of the previous years income tax (110% if AGI > $150K for MFJ) then you fall in the "Safe harbor".
If you are in that safe harbor (or one of the other possible safe harbor cases) you still will owe the taxes and have to pay them when you file your taxes the following year. But you won't owe any interest or underpayment penalties.

SO - if I were in your position, I'd probably NOT make estimated payments (nor have money taken as withholding from may taxable account). Instead I'd make sure my RMD's withholding would be enough to put me in the safe harbor. Then come April 2021 I'd pay whatever additional amount I'd owe when I did my taxes for the 2020 year. Even if I only get 0.5% interest on that money from now until April 2021, that's still a few bucks more in my pocket.


Excellent advice and is exactly what I do.

George
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It is but I will be sending what I owed for 2019 as a check in an envelope with the address handwritten and I hope it takes them a long time to get to it ;)

You had better send that check by certified mail. If the postmark is illegible on an ordinary first class letter, the date the IRS opens the envelope will be the date "received". It could take months for the IRS to work through the backlog of mail (several million pieces), You don't want to run the risk of being penalized for late payment just to save a few dollars of postage.

Ira
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You had better send that check by certified mail. If the postmark is illegible on an ordinary first class letter, the date the IRS opens the envelope will be the date "received". It could take months for the IRS to work through the backlog of mail (several million pieces), You don't want to run the risk of being penalized for late payment just to save a few dollars of postage.

Well, the last time I needed a postmark, I went into the PO and they hand stamped it so I could see it was legible. Apparently, the property tax bills I mailed in using outside mailbox not long ago were fine. I may be a wild woman and just do that since I won't need to touch anything in the PO.

It is good advice, though, especially if times were normal.
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Well, the last time I needed a postmark, I went into the PO and they hand stamped it so I could see it was legible. Apparently, the property tax bills I mailed in using outside mailbox not long ago were fine. I may be a wild woman and just do that since I won't need to touch anything in the PO.

Just because it was legible when the postmark was applied, doesn't mean the postmark is still legible when the letter is received. The envelope can be damaged in transit. The letter could get lost. The stamo could fall off the envelope taking part of the postmark with it. In any of these situations, the burden of proof will be on you to prove that you actually mailed what you claim to have mailed when you claim to have mailed it. The certified mail receipt is proof of timely mailing and reverses the burden of proof so that the IRS must prove that you didn't mail what you claim to have mailed on the date the certified receipt was issued.

Ira
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It [certified mail] is good advice, though, especially if times were normal.

Ir's actually better advice in these abnormal times. In normal times, the IRS typically receives and opens mail within one week of the mailing date. This year, the IRS is already more than three months behind as the mail received at the beginning of the shutdown is just now being opened. Not all of the IRS campuses have reopened; Fresno has had ongoing problems with positive COVID tests among employees. Nothing is normal. "Insurance" serves to protect against unusual events, not the expected.

Ira
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If you are in that safe harbor (or one of the other possible safe harbor cases) you still will owe the taxes and have to pay them when you file your taxes the following year.

This works for the financially responsible. It is also a trap for those who can't manage their finances.
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It is but I will be sending what I owed for 2019 as a check in an envelope with the address handwritten and I hope it takes them a long time to get to it ;)

You had better send that check by certified mail. If the postmark is illegible on an ordinary first class letter, the date the IRS opens the envelope will be the date "received". It could take months for the IRS to work through the backlog of mail


It sure doesn't seem worthwhile to risk fines, interest and hassle in order to get a few months of 0.08% interest on the amount owed.
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I would not send any money over 4 figures by mail. Bank to bank transfers only.
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