estimated tax payments
Hi Terry, I have a scenario and a tax question regarding the IRS ‘safe harbor for estimated tax payments’. We’ve been paying approx $20,000 per year in taxes for our years so far in retirement. But once we turn 72 and due to Required Distributions, we will owe approx $80,000 per year. One of the safe harbor conditions to avoid under-payment penalties is to pay 110% (for our AGI) of previous year taxes. So will that still hold for our 1st year of RMD taxes and allow us to ‘delay’ the payment in the above scenario of approx $58,000 ?
Terry Says
What you SHOULD do is ask the custodian of your IRA to WITHHOLD taxes — at least 20%, or more if you expect to be in a higher tax bracket — from each payment. That way you act in good faith and won’t have a hassle with the IRS if you wind up owing a bit more at tax time.
