Do I need to pay estimated taxes on a K-1 from an estate?

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MisterBill
Posts: 176
Joined: Thu Dec 24, 2015 3:21 pm

Do I need to pay estimated taxes on a K-1 from an estate?

Post by MisterBill » Sun Oct 08, 2017 6:25 pm

I received a K-1 with a significant long-term capital gain from my mother-in-law's estate earlier this year. Do I need to pay estimated taxes on it, or do I just need to worry about paying what I paid on my 2016 taxes to avoid a penalty when I file my 2017 taxes?

Complicating things here, I retired at the end of August, so my payroll withholding will be 1/4 short (I got a month of severance). So I will probably need to make a 4q estimate taxes payment to take care of that, unless there is some allowance for having less normal income this year in how they calculate the underpayment penalty. I'm collecting a pension starting this month, but the amount is relatively small compared to my total 2017 income.

And yes, I probably should speak to an accountant but don't have one so I figured I'd start here.

Gill
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Joined: Sun Mar 04, 2007 8:38 pm
Location: Florida

Re: Do I need to pay estimated taxes on a K-1 from an estate?

Post by Gill » Sun Oct 08, 2017 6:35 pm

The safe harbor rules should work for you. As you suggest, pay in an amount equal to your 2016 tax or 110% if your AGI was over $150,000.
Gill

kaneohe
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Joined: Mon Sep 22, 2008 12:38 pm

Re: Do I need to pay estimated taxes on a K-1 from an estate?

Post by kaneohe » Sun Oct 08, 2017 10:41 pm

Possibly because of lower wages this yr., you may not meet the safe harbor of 100%(110%) of last yrs taxes. Perhaps the other safe harbor of 90% of
this yrs taxes may apply but you will have to do a simulated tax return to see.

MisterBill
Posts: 176
Joined: Thu Dec 24, 2015 3:21 pm

Re: Do I need to pay estimated taxes on a K-1 from an estate?

Post by MisterBill » Mon Oct 09, 2017 2:38 am

kaneohe wrote:
Sun Oct 08, 2017 10:41 pm
Possibly because of lower wages this yr., you may not meet the safe harbor of 100%(110%) of last yrs taxes. Perhaps the other safe harbor of 90% of this yrs taxes may apply but you will have to do a simulated tax return to see.
Thanks.. it seems like the 90% would be of the total amount of taxes due for this year, including the capital gain. There's no way that's going to be less than 100% of last year's tax bill, so I think that paying that amount is the safe bet.

Knowing that I don't have to pre-pay the taxes for the capital gain (certainly most of it) simplifies things for me since I put an estate distribution I received in March in a one year CD knowing that I'd have it to pay the income tax in April 2018. But I recently started wondering if I'd forgotten about estimated tax payments.

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