Estimated tax payments on Roth Conversion
Money was converted in 2010 from Traditional to a Roth. Will be taking advatage of provision of reporting half in 2011 and half in 2012. When should estimated taxes be paid on the conversion?
Money was converted in 2010 from Traditional to a Roth. Will be taking advatage of provision of reporting half in 2011 and half in 2012. When should estimated taxes be paid on the conversion?
Permalink Submitted by Alan Spross on Wed, 2011-03-09 20:14
Usually, you would use the 2010 tax liability as a safe harbor and pay 25% of that liability on each quarterly due date in 2011. 27.5% if income over 150,000. Meeting the safe harbor is wise to avoid having to use the annualized income installment method, since use of that would probably require considering the 2011 share of the conversion as taxable in the first quarter. In 2012 the same process would be used.