NYS Estimated Tax Regs re Withholding on IRA Distribution(s)

Submitted by BARTON MASSEY on Sat, 2021-02-06 18:38

Can NYS regulations for estimated income tax liabilities due approx. quarterly through the year be satisfied via withholdings on IRA distributions interspersed throughout the year or even by a single annual withholding on a yearend IRA withdrawal? That is, does NYS tax authority allow exactly the same withholding procedure that can be used for payment of federal estimated income taxes to avoid penalties. If necessary to supplement a straight “yes” or “no” answer, please keep it simple. THANKS!
Bart Massey (still doing own taxes at age 89)



Submitted by Angelina Decastro on Sun, 2021-02-07 07:05

Deeply appreciate your explanation and advice to our recent questions. Follow-up questions :1. Told to wait for our 5498 by May 2021 for rollovers stated in 1099-R. Should I call the Custodian now before 5498 is sent in  May to specify that the traditional IRA rollover is the ordinary rollover and the SEP-IRA is the CRD rollover for 2020 ? Which lines on 5498 will show the ordinary rollover and which lines for the CRD ? Do I get separate 5498 for traditional IRA and SEP-IRA?2. My husband’s rollover is from the same  traditional IRA. Will 5498 show which rollover is ordinary and which is       CRD even though it is from same traditional IRA ?3. Should we wait for the 5498 in May 2021 and request for tax reporting extension this year ? We will try to get appointment with your advisor once we get all the documents. This is first time for us to do rollover.4. Read in Google that form 8606 is necessary to avoid paying double tax since we rolled back twice.   If we pay tax and roll it back or repay, how will IRS remember we already paid tax on it when we roll out second    time in the future? Please explain5. In your last response, you stated that ” if it were not RMD’s and were it not for CARES ACT, it does not matter     whether the rollback was to same IRA or not.”  Does that mean – ordinary once a year rollover can be returned     to SAME IRA but CARES ACT does not allow CRD’s to be returned to same traditional IRA ?6. Should  1040-SR lines 4a  IRA distribution  and 4 b Taxable each be itemized for me and my husband     for each person’s IRA or SEP-IRA ?  February 7, 2021.      

Submitted by BARTON MASSEY on Sun, 2021-02-07 17:25

I Hope Forum Comments Are Still Forthcoming to My Question, notwithstanding confusion caused by incorrectlyposted, erroneously labeled, long discourse on unrelated issue !  Pls. adjust  Angelina’s  Q to enable separate Forum coments to my issue.  Thanks.  Bart M.

Submitted by Alan - IRA critic on Sun, 2021-02-07 17:59

Yes, NYS treats all withholding, whatever the date, as paid equally throughout the year in the same manner as for federal taxes. That means you could satisfy your prepayment requirements solely with a late year withholding such as from an IRA RMD or other distribution. The following is copied from NYS Inst. for Form IT-2105.9
“The penalty for each installment is computed separately. Income taxes withheld from your salary, pension, etc., are considered payments of estimated tax in equal installments on the four installment dates, unless you prove otherwise.”
Of course, the amount withheld must still equal one of the safe harbor amounts, typically 100% of your 2019 tax liability (110% for higher incomes), or 90% of your 2020 tax liability. 

Add new comment

Log in or register to post comments