2020 taxes — estimates
4 yrs ago I would itemize on even yrs and stand deduction on odds. Sometimes I owed sometimes I got refund. Then came 2016 and my investments went crazy. I now have to pay estimated. Other than investments my retirement income is stable and I save money every month. I live quite frugally only travelling a lot. I donate generously along with my total rcd. Can you suggest a strategy that will keep my money with me and me not in jail?
Terry Says
Whether or not you take the standard deduction or itemize is not an issue. Use the method that has you pay the least amount in taxes. Since they increased the standard deduction and limited deductions for state and local taxes (including property taxes) to $10,000 many people have chosen to itemize.
As for quarterly estimated payments, you are “safe” as long as you pay in 100% of last year’s taxes owed. But if you just have retirement income and not a lot of stock gains, you could ask for money to be withheld from your retirement plan distributions for tax purposes. Then you wouldn’t be required to pay quarterly estimates.
That should keep you out of “tax jail” if that’s your question! And then keep the balance of your money in a diversified investment plan, with some “chicken money” on the side in a bank money market fund — even though it doesn’t pay interest these days!
