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Posted by Brew1 on September 9, 2007, 10:09 pm
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>> Keep in mind: unless you make 4 EQUAL payments (and it's too
>> late in the year to accomplish that), you can be charged
>> with underpayment even if you paid in 90% of current
>> liability.
> Always one for trying creative solutions (but still well
> within the borders of the law), would the following work?
>
> Make an IRA withdrawal (distribution) to make up estimate
> shortfall (plus some cushion); Have the IRA
> custodian/trustee withhold the entire distribution for
> taxes; Within 60 days, pay into the IRA the same amount as
> distributed/withheld.
>
> Since withholdings (as opposed to estimates) don't have to
> be evenly spread out during the year, this provides a last
> minute "fix up" for total estimates/withholding. Since the
> equivalent amount is redeposited in the IRA within 60 days,
> the rollover is a non-taxable event, and no penalty. The IRS
> allows you to do a rollover into the same IRA, so that's not
> an issue. Of course there is the warning that you can't do
> this more than once a year, per IRA.
>> when you prepare your taxes, use the
>> annualized method if income was greater in the second half
>> of the year.
> Been there, done that. Not worth the effort in the detailed
> bookkeeping if there's a better way.
whatever amount you have withheld is not available to you
for rollover--you have to come up with those funds out of
your own pocket. Hardly worth the trouble to avoid an
underpayment penatly.
the annualized method is a pain, but it does work.
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<< that may be imposed upon the taxpayer. >>
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