|
Name:
|
GoneFishin
-
|
Subject:
|
HOW I Avoid Estimated Taxes
|
Date:
|
7/14/2022 12:01:43 PM (updated 7/14/2022 1:04:07 PM)
|
|
To clear up...I can request any amount to be withheld from Social Security, pension, and IRA.
Retirees can avoid estimated if their income comes from sources such as Social Security, pension, and IRA withdrawal assuming they withhold 100% (110% if income over $150,000) of last year's tax bill.
When you request an IRA withhdrawl you have to indicate if you want any of it withheld. I withhold 100% of my IRA withdrawal in December to help meet the 110% rule. The IRS considers all withholding to be spread out over the entire year.
I assume you cannot cover your estimated with withholding so, yes, you have to pay estimated. Your quarterly estimated could be your tax paid for 2021 times 110% divided by 25% to avoid a penalty.
If your tax last year was higher than your estimated tax for this year than you would pay the quarterly tax based on this year's income.
This year I, like you, will have a large capital gains tax. Not as large as yours, but large for me. My withholding will be equal to 110% of my 2021 tax. Therefore, I pay no estimated tax. Obviously, I will have a large tax bill in April for the capital gains.
I am sure your accountant has a handle on it.
As a side note, one year when I was working, one year I realized in late November that I was not going to have enough withheld to avoid a penalty. I went to HR and requested that 94% of my December paycheck be withheld. I was able to avoid any underpayment of my tax since the IRS considers all withholding to be spread out the entire year.
|