Tax Question

Submitted by Kevin O'Hearn on Fri, 2018-06-01 16:34

If an IRA distribution is processed today with tax withholdings does the IRS consider that the taxes were paid on the distribution date or as of 01/01/2018?



Submitted by Alan - IRA critic on Fri, 2018-06-01 18:16

Withholding is treated as having been paid equally throughout the year regardless of the transaction date. 

Submitted by David Mertz on Fri, 2018-06-01 21:11

… unless the taxpayer chooses to treat the withholding as paid on the transaction date and can document the date of the withholding.  This might be necessary if the taxpayer is annualizing income.

Submitted by William Tuttle on Fri, 2018-06-01 21:16

  • The default is for withholding to be equally applied during the year. This is especially useful when taking RMDs or other pre-tax distributions late in the year. You can use whatever withholding is necessary to cover the taxes on other non-retirement plan redemptions throughout the year.
  • However, if it is advantageous (and you are a glutton for punishment) you can file Form 2210, check part II(D) to elect to treat withholding as paid on the dates it was actually withheld and complete Schedule AI – Annualized Income Installment Method.
  • OOPs too slow with the fat fingers. Didn’t know DMx had beat me to it.

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