Is it the same answer for Required Minimum Distribution (RMD) withdraws? To avoid the penalty, must I file and pay estimated quarterly tax payments? When? What if the withdraws are done on December 30th, can I wait until I file for that year in April?
Question is confusing.
Yes. There is penalty for underwithholding from early distribution from IRA account. This differs from MDR withdrawal rules.
Yes. You may pay estimated additional taxes at time of withdrawal or quarterly.
Yes. If withdrawals on December 30, they may be reported and paid April of following year.
Yes. You are required to pay taxes on your income as you earn it, hence our wonderful withholding , and quarterly estimated tax payments system. If you do not have taxes withheld, you must filed a quarterly estimated tax return. If withdrawals are made on December 31, the estimated tax payment would occur on the January 15th quarterly estimated tax payment form (quarterly reports are made on April 15, June 15, Sept. 15 and Jan. 15 of the following year). Failure to do so may result in a penalty and interest. You can avoid a penalty for underpayment of estimated taxes if you meet a "safe harbor" payment amount: the smaller of 90 percent of what is ultimately owed or a percentage of the taxes you paid in the previous year. If you make less than $150,000, the safe harbor is 100 percent of the previous year's taxes. If you make more than $150,000, the prior-year safe harbor percentage is more than 100 percent. The exact amount varies each year, so check out the latest version of IRS Publication 505 for details. If you thought you had your withholding figured correctly and made the estimated-tax payments but still came up short, you can request a waiver of any penalty by filing Form 2210.
This reply contains general information, is not intended to give legal advice, should not be considered legal advice, and does not create an attorney-client relationship. You should not assume that the information applies to your specific situation without consulting counsel. Non-lawyers are cautioned that providing specific advice and counsel to others may constitute the unauthorized practice of law, and therefore, care should be taken in dispensing information contained herein.
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