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Subject Author Date
estimated Fed taxes? Jeff 04-28-2008
Posted by Arthur Kamlet on April 29, 2008, 7:18 pm
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>Harlan Lunsford wrote:
>> 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.


Just remember, if you have more than 50% of the distribution
withheld for taxes, you can't efile.
--


ArtKamlet at a o l dot c o m Columbus OH K2PZH

--
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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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<< to this newsgroup as well as our anti-spamming policy >>
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Posted by Ernie Klein on April 29, 2008, 7:15 pm
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> ed wrote:

> > .: 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...?


Great idea - I like it - get rid of estimated payments altogether.

Not only does this make the paperwork easier, I can keep (and earn
interest) on my money until the last minute.

Does anyone see any downside to this idea?

With my Charles Schwab IRA, to make electronic transfers to my bank
account I had to give them preset percentages for federal and state
withholding, but I found out, if I request (online) that they cut a
check and mail it to me (free of charge), that I can enter the
percentage of withholding on the fly, just for that check.

--
-Ernie-

--
<< ------------------------------------------------------- >>
<< 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 Harlan Lunsford on April 29, 2008, 7:21 pm
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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.

(snipped....)

After my previous reply one thing came to mind as to why this won't
completely work.

If federal withholding is more than 50% of gross
distribution, then electronic filing is not allowed and one would be
relegated to filing the old fashioned way. And I'm an ardent supporter
of efiling.

But of course it could be partially used with precise advance planning.
And who better than a tax pro for this? (grin)

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 ed on April 29, 2008, 9:27 pm
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> 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.
>
> (snipped....)
>
> After my previous reply one thing came to mind as to why this won't
> completely work.
>
> If federal withholding is more than 50% of gross
> distribution, then electronic filing is not allowed and one would be
> relegated to filing the old fashioned way.  And I'm an ardent supporter
> of efiling.
>
> But of course it could be partially used with precise advance planning.
> And who better than a tax pro for this?  (grin)
>
> ChEAr$,
> Harlan Lunsford, EA n LA

The "willing to use" is because before age 70 an IRA withdrawal is
voluntary and maybe he wants to keep the money in his IRA.. As for e-
filing, UNLESS you are due a refund, WHY? So its cost 41 cents, or
maybe a couple of $$$ to get a receipt, deduct that cost from the
other savings!.

Consider that taxpayer has used this ploy to pay 90% of current
year's *estimated* tax (or more) , or the amount of last year's
tax), he OWES the IRS so what's the hurry to e-file? I have yet to
e-file because we UNDERPAY the minimum acceptable amount and pay the
other 10% or more next April.

ed

--
<< ------------------------------------------------------- >>
<< 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 Ira Smilovitz on April 29, 2008, 9:54 pm
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>> 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.
>>
>> (snipped....)
>>
>> After my previous reply one thing came to mind as to why this won't
>> completely work.
>>
>> If federal withholding is more than 50% of gross
>> distribution, then electronic filing is not allowed and one would be
>> relegated to filing the old fashioned way. And I'm an ardent supporter
>> of efiling.
>>
>> But of course it could be partially used with precise advance planning.
>> And who better than a tax pro for this? (grin)
>>
>> ChEAr$,
>> Harlan Lunsford, EA n LA
>
> The "willing to use" is because before age 70 an IRA withdrawal is
> voluntary and maybe he wants to keep the money in his IRA.. As for e-
> filing, UNLESS you are due a refund, WHY? So its cost 41 cents, or
> maybe a couple of $$$ to get a receipt, deduct that cost from the
> other savings!.
>
> Consider that taxpayer has used this ploy to pay 90% of current
> year's *estimated* tax (or more) , or the amount of last year's
> tax), he OWES the IRS so what's the hurry to e-file? I have yet to
> e-file because we UNDERPAY the minimum acceptable amount and pay the
> other 10% or more next April.
>
> ed

Filing and payment are independent events. You can efile early and know that
your return is filed and pay your tax liability on April 15 (by check or
electronic draft). You get the best of both worlds.

Ira Smilovitz

--
<< ------------------------------------------------------- >>
<< 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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