Paying estimated tax on 4th Q Roth conversion

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Myopic squirrel
Posts: 235
Joined: Wed Apr 24, 2013 11:02 am

Paying estimated tax on 4th Q Roth conversion

Post by Myopic squirrel » Thu Nov 14, 2019 4:46 pm

Having taken our RMDs, just made our first Roth conversion without taking any withholding. Have been making estimated quarterly payments, with the next due in January. Can I just add the estimated tax amount of the Roth to the estimated amounts I've been paying for the last payment? Thank you in advance

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FiveK
Posts: 7859
Joined: Sun Mar 16, 2014 2:43 pm

Re: Paying estimated tax on 4th Q Roth conversion

Post by FiveK » Thu Nov 14, 2019 4:51 pm

Myopic squirrel wrote:
Thu Nov 14, 2019 4:46 pm
Can I just add the estimated tax amount of the Roth to the estimated amounts I've been paying for the last payment?
Yes.

If you had paid enough estimated tax in the first 3 quarters to match your tax liability in that time, and do the same for the 4th quarter, everything will be fine.

You may need to fill out Schedule AI in https://www.irs.gov/pub/irs-pdf/f2210.pdf but you won't owe any penalties.

kaneohe
Posts: 5956
Joined: Mon Sep 22, 2008 12:38 pm

Re: Paying estimated tax on 4th Q Roth conversion

Post by kaneohe » Thu Nov 14, 2019 4:55 pm

Myopic squirrel wrote:
Thu Nov 14, 2019 4:46 pm
Having taken our RMDs, just made our first Roth conversion without taking any withholding. Have been making estimated quarterly payments, with the next due in January. Can I just add the estimated tax amount of the Roth to the estimated amounts I've been paying for the last payment? Thank you in advance
Hopefully you converted an additional withdrawal from your TIRA and not the RMD itself? You can pay the estimated tax w/ the Q4 payment in January but you will have to demonstrate that it was proper timing by filing F2210 Sch AI that shows you paid taxes as you got income.
If you don't file that form, IRS assumes income comes in evenly during the yr and expects you to pay estimated taxes in a similar manner.
Else a penalty. After you file that form once, you may decide you never want to do that again........or you may find it a piece of cake.

rivercrosser
Posts: 62
Joined: Thu Oct 31, 2019 3:48 pm

Re: Paying estimated tax on 4th Q Roth conversion

Post by rivercrosser » Thu Nov 14, 2019 10:54 pm

kaneohe wrote:
Thu Nov 14, 2019 4:55 pm
Myopic squirrel wrote:
Thu Nov 14, 2019 4:46 pm
Having taken our RMDs, just made our first Roth conversion without taking any withholding. Have been making estimated quarterly payments, with the next due in January. Can I just add the estimated tax amount of the Roth to the estimated amounts I've been paying for the last payment? Thank you in advance
Hopefully you converted an additional withdrawal from your TIRA and not the RMD itself? You can pay the estimated tax w/ the Q4 payment in January but you will have to demonstrate that it was proper timing by filing F2210 Sch AI that shows you paid taxes as you got income.
If you don't file that form, IRS assumes income comes in evenly during the yr and expects you to pay estimated taxes in a similar manner.
Else a penalty. After you file that form once, you may decide you never want to do that again........or you may find it a piece of cake.
I ran into that problem a couple years back. Converted some towards end of year. Went ahead and did estimated payment. Turbotax caculated I owed an 11.00 penalty. Been using turbotax for years but trying to fill out the F2210 looked like more trouble than it was worth for me. I just paid the penalty.

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