Ask Terry Questions paying taxes on a Roth conversion

paying taxes on a Roth conversion

By Terry Savage on January 02, 2020 | Financial Planning / Retirement

I am converting a regular IRA to a Roth IRA over the next few years before I turn 70 and I guess now 72. I am using EFTPS online to pay the tax on the conversion as I convert. When I file my taxes will I get something like a 1099 form for the tax I paid online? I printed out from the EFTPS site the info when I paid it. I know the insitution where I am doing the conversion will send me a 1099 for the regular IRA withdraw for the conversion. But the tax I prepaid will not be on that. I do my taxes online .

Terry Says

OK, this is where you consult your CPA. But here’s how I see it. First, yes you will receive a 1099 for the conver4sion. It will be a 1099-R, which stands for “rollover” to Roth.
Here’s the legalese:
“You’ll receive a Form 1099-R from your financial institution reporting the Roth conversion. It will be coded as a rollover to a Roth IRA. You’ll use the information from that form to report your Roth conversion income on Form 8606 with the taxable portion of the conversion income reported on your Form 1040.”
But REPORTING your taxes owed is not the same as PAYING your taxes owed. You have a safe harbor for the year if you make estimated tax payments equal to 90% of the taxes owed. Using EFTPS, which is the automated Federal tax payment system, will certainly make it clear to the IRS that you have paid in the appropriate amount. Then just enter the taxes paid amount on your tax return.
But if you have any questions about the 90% amount due, consult your tax preparer.
And remember, a big gain could mean you pay more for your Medicare premiums each year!!

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