4th Quarter Roth IRA Conversion
I am hoping that you can confirm that I must make estimated quarterly tax payments even if I make my Roth IRA conversion in the 4th quarter. I will be making equal payments that will total 100% of last year’s taxes paid (AGI less than 90,000) and do not want to use Form 2210. If I paid the full amount in the 4th quarter when the conversion is made, I expect that I will have to pay a penalty, is that correct?
Permalink Submitted by Alan - IRA critic on Sat, 2024-03-02 23:34
If you paid equal quarterly estimates of 1/4 of the prior year tax liability, there will be no penalty regardless of how much you owe. But if you underpaid in the first 3 quarters and made it up with the final estimate due 1/15 you will owe an underpayment penalty for the first 3 quarters, which could only be alleviated by filing the 2210 AI showing that most of the taxable income was in Q4..
Permalink Submitted by Peter Karakondis on Sun, 2024-03-03 02:01
Ok, thanks again, Alan.