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Subject Author Date
estimated Fed taxes? Jeff 04-28-2008
Posted by Jessica on April 28, 2008, 8:21 pm
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> How much should I pay for estimated Fed taxes so that I do not owe a
> penalty if my income next year is higher than in 2007?
>
> Is it 100% of the amount of tax paid for 2007 or some other calculation?
>
> Thanks.
>
> Jeff
Frankly I don't know if it is 90% or 100%, I have always found that
confusing and paid 100% just to be sure; but don't forget that your
withholding counts toward it. If you get W2 income figure that in.

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Posted by rick++ on April 29, 2008, 12:33 pm
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>How much should I pay for estimated Fed taxes so that I do not owe a
>penalty if my income next year is higher than in 2007?

I fill out the 2210 penalty form to tell me what I owe
any given quarter.
My investment income is irregular.

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<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
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Posted by ed on April 29, 2008, 5:16 pm
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> >How much should I pay for estimated Fed taxes so that I do not owe a
> >penalty if my income next year is higher than in 2007?
>
> I fill out the 2210 penalty form to tell me what I owe
> any given quarter.
> My investment income is irregular.

Jeff
.: Are you aware of the special break you can give yourself as a
retiree? Instead of paying installments don't do anything all year
and then in December withdraw your RMD from your 401K or IRA and have
the trustee withhold the amount of your last year's tax (or at least
90% of what you are certain will be your current year's tax). If you
are under 70 this presumes you are willing to use an IRA distribution
instead of paying your taxes with after tax dollars. Also, before
doing this call your trustee and make sure they will withhold and how
long it takes them because it must be withheld from a current year's
distribution.

Actually any source of income that you can withhold from will work,
even Social Security but you would be paying some each month instead
of investing that to pay in December. I do this with T.Rowe Price
verbally. I call them to distribute the amount of my RMD and withhold
the amount I need and send me the remainder. Painless, convenient, no
paperwork, no penalties.

ed

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<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
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Posted by Harlan Lunsford on April 29, 2008, 6:30 pm
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ed wrote:
>>> How much should I pay for estimated Fed taxes so that I do not owe a
>>> penalty if my income next year is higher than in 2007?
>> I fill out the 2210 penalty form to tell me what I owe
>> any given quarter.
>> My investment income is irregular.
>
> Jeff
> .: Are you aware of the special break you can give yourself as a
> retiree? Instead of paying installments don't do anything all year
> and then in December withdraw your RMD from your 401K or IRA and have
> the trustee withhold the amount of your last year's tax (or at least
> 90% of what you are certain will be your current year's tax). If you
> are under 70 this presumes you are willing to use an IRA distribution
> instead of paying your taxes with after tax dollars. Also, before
> doing this call your trustee and make sure they will withhold and how
> long it takes them because it must be withheld from a current year's
> distribution.
>
> Actually any source of income that you can withhold from will work,
> even Social Security but you would be paying some each month instead
> of investing that to pay in December. I do this with T.Rowe Price
> verbally. I call them to distribute the amount of my RMD and withhold
> the amount I need and send me the remainder. Painless, convenient, no
> paperwork, no penalties.
>
> ed
>
Well I'll be darned! You CAN teach an old dog new tricks.

Then you're saying that T Rowe in Bal'mer (my favorite as well) will
withhold a set dollar amount instead of a predetermined percentage like
15,20,25...?

That's a REAL good idea, ed.

ChEAr$,
Harlan Lunsford, EA n LA

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by joetaxpayer on April 29, 2008, 7:01 pm
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Harlan Lunsford wrote:
> ed wrote:
>> Jeff
>> .: Are you aware of the special break you can give yourself as a
>> retiree? Instead of paying installments don't do anything all year
>> and then in December withdraw your RMD from your 401K or IRA and have
>> the trustee withhold the amount of your last year's tax (or at least
>> 90% of what you are certain will be your current year's tax). If you
>> are under 70 this presumes you are willing to use an IRA distribution
>> instead of paying your taxes with after tax dollars. Also, before
>> doing this call your trustee and make sure they will withhold and how
>> long it takes them because it must be withheld from a current year's
>> distribution.
> Well I'll be darned! You CAN teach an old dog new tricks.
>
> Then you're saying that T Rowe in Bal'mer (my favorite as well) will
> withhold a set dollar amount instead of a predetermined percentage like
> 15,20,25...?

The Schwab site allows Federal withholding from 10% to 100% on an IRA
distribution. So if, for whatever reason, 10% of the RMD is too much,
you can do this in two moves. Take 10X your tax burden out, then take
the rest with no tax withheld.

As far as ed's "this presumes you are willing to use an IRA
distribution", well, if you have an RMD, the math is no different, not
like you can take out less money. If the RMD won't cover your taxes,
that's another story.
Joe
www.blog.joetaxpayer.com

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

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