Can I choose to pay estimated tax ?
Joe C
taxable by the federal government only. Can I choose to pay
estimated tax quarterly instead of having monthly withholding
from my pension check? I will most likely have to pay estimated
tax for investment income anyway. Thanks, Joe
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paultry
> I will be retiring soon and will be receiving a pension that is
> taxable by the federal government only. Can I choose to pay
> estimated tax quarterly instead of having monthly withholding
> from my pension check? I will most likely have to pay estimated
> tax for investment income anyway. Thanks, Joe
>
From IRS Pub 575:
http://www.irs.gov/publications/p575/ar02.html#en_US_publink10004399
Withholding Tax and Estimated Tax
Your retirement plan distributions are subject to federal
income tax withholding. However, you can choose not to have
tax withheld on payments you receive unless they are
eligible rollover distributions. (These are distributions,
described later under Rollovers, that are eligible for
rollover treatment but are not paid directly to another
qualified retirement plan or to a traditional IRA.) If you
choose not to have tax withheld or if you do not have enough
tax withheld, you may have to make estimated tax payments.
D. Stussy
news:czgLm.10629$Sw5....@newsfe16.iad...
> I will be retiring soon and will be receiving a pension that is
> taxable by the federal government only. Can I choose to pay
> estimated tax quarterly instead of having monthly withholding
> from my pension check? I will most likely have to pay estimated
> tax for investment income anyway. Thanks, Joe
Form W-4P has such an option.
hr(bob) hofmann@att.net
wrote:
> "Joe C" <no-s...@no-spam.com> wrote in message
>
> news:czgLm.10629$Sw5....@newsfe16.iad...
>
> > I will be retiring soon and will be receiving a pension that is
> > taxable by the federal government only. Can I choose to pay
> > estimated tax quarterly instead of having monthly withholding
> > from my pension check? I will most likely have to pay estimated
> > tax for investment income anyway. Thanks, Joe
>
> Form W-4P has such an option.
I wonder what the administrator of the pension plan will allow.
Usually they like to make equal monthly payments and you will be
throwing a monkey wrench into their well-thought out procedures.
Salmon Egg
<81d9c8fa-6f4f-4fc6...@k17g2000yqh.googlegroups.com>,
"hr(bob) hof...@att.net" <hrho...@att.net> wrote:
> On Nov 13, 3:37�pm, "D. Stussy" <spam+newsgro...@bde-arc.ampr.org>
> wrote:
> > "Joe C" <no-s...@no-spam.com> wrote in message
> >
> > news:czgLm.10629$Sw5....@newsfe16.iad...
> >
> > > I will be retiring soon and will be receiving a pension that is
> > > taxable by the federal government only. Can I choose to pay
> > > estimated tax quarterly instead of having monthly withholding
> > > from my pension check? I will most likely have to pay estimated
> > > tax for investment income anyway. Thanks, Joe
> >
> > Form W-4P has such an option.
>
> I wonder what the administrator of the pension plan will allow.
> Usually they like to make equal monthly payments and you will be
> throwing a monkey wrench into their well-thought out procedures.
I am not a tax expert, but I never had income tax withheld by the payer
whether a pension fund, or an IRA dispenser. I have not gotten in
trouble with the IRS for doing so.
It postpones by a bit, having to turn over the money to the Government.
If you can afford it and arrange it so that the payment is on the last
day of the year, you do not have to pay until April 15 of the following
year, It will take someone more knowledgeable than me to make sure there
is no gotcha in the tax code.
Bill
--
As the years go by, dying just before having to fill out a tax return has merit.
HLunsford
>
> I am not a tax expert, but I never had income tax withheld by the payer
> whether a pension fund, or an IRA dispenser. I have not gotten in
> trouble with the IRS for doing so.
>
> It postpones by a bit, having to turn over the money to the Government.
> If you can afford it and arrange it so that the payment is on the last
> day of the year, you do not have to pay until April 15 of the following
> year, It will take someone more knowledgeable than me to make sure there
> is no gotcha in the tax code.
>
> Bill
>
before Dec 31, AND that you were required to make estimated tax
payments quarterly. You will still owe the underpayment penalty on each
of the first three quarterly amounts.
Good software will automatically figure this for you given the right inputs.
ChEAr$,
Harlan Lunsford, EA n LA
Seth
HLunsford <hlun...@bellsouth.net> wrote:
>Salmon Egg wrote:
>> If you can afford it and arrange it so that the payment is on the last
>> day of the year, you do not have to pay until April 15 of the following
>> year, It will take someone more knowledgeable than me to make sure there
>> is no gotcha in the tax code.
>>
>Ah, but there is a monkey wrench. Let's say you owe $5,000 and pay it
>before Dec 31, AND that you were required to make estimated tax
>payments quarterly.
If the income is all on the last day of the year, there are no
quarterly estimates due except the final one.
Unfortunately for Salmon Egg, that's January 31 (so you'd do better
getting all the income January 1 and paying equal quarterly payments).
Seth
HLunsford
> In article <hek1a4$ed3$2...@news.eternal-september.org>,
> HLunsford <hlun...@bellsouth.net> wrote:
>>>
>> Ah, but there is a monkey wrench. Let's say you owe $5,000 and pay it
>> before Dec 31, AND that you were required to make estimated tax
>> payments quarterly.
>
> If the income is all on the last day of the year, there are no
> quarterly estimates due except the final one.
>
> Unfortunately for Salmon Egg, that's January 31 (so you'd do better
> getting all the income January 1 and paying equal quarterly payments).
>
there will be none IF the final estimate is paid by January 15th, not 31st.
ChEAr$,
Harlan Lunsford, EA n LA
--
Salmon Egg
HLunsford <hlun...@bellsouth.net> wrote:
> Seth wrote:
> > In article <hek1a4$ed3$2...@news.eternal-september.org>,
> > HLunsford <hlun...@bellsouth.net> wrote:
> >>>
> >> Ah, but there is a monkey wrench. Let's say you owe $5,000 and pay it
> >> before Dec 31, AND that you were required to make estimated tax
> >> payments quarterly.
> >
> > If the income is all on the last day of the year, there are no
> > quarterly estimates due except the final one.
> >
> > Unfortunately for Salmon Egg, that's January 31 (so you'd do better
> > getting all the income January 1 and paying equal quarterly payments).
> >
> Quite true, if one uses the alternate method of figuring the penalty,
> there will be none IF the final estimate is paid by January 15th, not 31st.
>
> ChEAr$,
> Harlan Lunsford, EA n LA
Every year it seems, that most of my mutual fund distributions occur in
December. I play with the idea of filling out a form, whose number I do
not remember, for reducing penalties for late estimated tax payment. My
income is such that the saving is not worth this trouble. I end up
paying a bit more than I have to.
Although I readily admit to not being a tax expert, I believe that this
form allows you to pay tax on April 15 if you do not know in advance
what the income is going to be.
Bill
--
As the years go by, dying just before having to fill out a tax return has merit.
--
rick++
> Every year it seems, that most of my mutual fund distributions occur in
> December. I play with the idea of filling out a form, whose number I do
> not remember, for reducing penalties for late estimated tax payment. My
> income is such that the saving is not worth this trouble. I end up
> paying a bit more than I have to.
If you are more than $1000 in arrears, the IRS will compute the tax
penalty
automatically for you, using the short method method on form 2210
which
assume income evenly distributed throughout the year. You may save a
few
penalty dollars by computing the uneven income method. But you have
to
submit the 2210 form with your taxes then.
In years I suspect I may be liable for estimated taxes, I print
snapshots of
major income sources at the end of each quarter. Lots of accounts now
dont
keep a full 12 months of statements online, making it tediously to
collect this
information.
Salmon Egg
<8a6a3ca3-e0c1-4cc4...@o10g2000yqa.googlegroups.com>,
"rick++" <ric...@hotmail.com> wrote:
> On Nov 26, 12:08 am, Salmon Egg <Salmon...@sbcglobal.net> wrote:
>
> > Every year it seems, that most of my mutual fund distributions occur in
> > December. I play with the idea of filling out a form, whose number I do
> > not remember, for reducing penalties for late estimated tax payment. My
> > income is such that the saving is not worth this trouble. I end up
> > paying a bit more than I have to.
>
> If you are more than $1000 in arrears, the IRS will compute the tax
> penalty
> automatically for you, using the short method method on form 2210
> which
> assume income evenly distributed throughout the year. You may save a
> few
> penalty dollars by computing the uneven income method. But you have
> to
> submit the 2210 form with your taxes then.
>
> In years I suspect I may be liable for estimated taxes, I print
> snapshots of
> major income sources at the end of each quarter. Lots of accounts now
> dont
> keep a full 12 months of statements online, making it tediously to
> collect this
> information.
Form 2210 is the one that I did not remember. If I use a tax program
like TurboTax, it is able to calculate the penalty based upon uniform
income flow throughout the year. But that is not the situation for me.
I typically get a small mutual fund distribution in June and a large one
in December. In addition, on average. If you cash in mandatory
distributions from IRA by converting to taxable mutual funds after the
last fund distribution, that distribution does not show up until the
following year.
If I understand the workings of 2210, tax on income in December does not
have to be paid until April 15 of the following year.
As I grow older, the burden of paper work is becoming more overwhelming.
There is a lot of detail to form 2210. I would like to see a way in
which I could divide my income into two parts. The first is the part
that is uniformly distributed such a Social Security and bank interest.
The second part consists of the more episodic income such as IRA
distributions and mutual fund distributions that are concentrated toward
the end of the year.
Is there a way to take the total income and subtract of the episodic
income and use the difference to distribute uniformly for the year in
2210? To that I add the episodic income in 2210.
For me, the difficulty comes when form 2210 requests things like
adjusted gross income throughout the year. How do you calculate such
things at intermediate times? Maybe that is a separate question I can
ask on this forum.
In end, I usually take the easy way out and pay a bit more in tax than I
would using better strategy. The older I get, the more likely it becomes
that I will have sufficient income to live my life out. The small amount
of extra tax I pay is well worth it for the privilege of having lived in
a wonderful country.
Bill
--
An old man would be better off never having been born.