[Caymus]

I have a question on withholding taxes from investment accounts. I assume you can have taxes withheld from 401K and regular IRA distributions. How about from regular brokerage accounts and mutual funds? If not, I assume you would account for that in estimated tax payments.

It also looks like taxes can also be withheld from SS payments.

This will be the first year that I will not be able to adjust my employer withholding to account for investments.

I would appreciate any advice (except see a tax/investment professional)

[Bill14564]

Originally Posted by Caymus

I have a question on withholding taxes from investment accounts. I assume you can have taxes withheld from 401K and regular IRA distributions. How about from regular brokerage accounts and mutual funds? If not, I assume you would account for that in estimated tax payments.

It also looks like taxes can also be withheld from SS payments.

This will be the first year that I will not be able to adjust my employer withholding to account for investments.

I would appreciate any advice (except see a tax/investment professional)

I'm curious about this as well. In particular, if a financial advisor/brokerage submits payments for taxes on capital gains, are those payments considered "withholding" or are they considered "estimated tax payments?" The two types of payments are treated differently when calculating underpayment penalties.

Fortunately for us, we can still make adjustments to payments that are considered to be withholding. Otherwise, we would need to pay close attention to our quarterly income and gains and pay estimated taxes.

[retiredguy123]

I never have any taxes withheld unless withholding is mandatory. Just go to irs.gov and make an estimated payment online. Typically, quarterly estimated payments are due on April 15, June 15, September 15, and January 15. But, you can make additional tax payments at any time. They are happy to take your money.

[UsuallyLurking]

Based on my own personal experience: Yes, taxes can be withheld on retirement accounts, whether they are from RMDs or non-RMD withdrawals. My brokerage account does not offer me any way of withholding from it.

My understanding is that, yes, you can have any amount you want withheld from Social Security payments if you desire.

Personally, I use a combination of RMD withholding and estimated tax payments, and I'm usually pretty close when the time comes for reckoning.

[Stu from NYC]

I have taxes withheld on rmd distributions from mutual funds on 401 and ira.

My cpa has me paying quarterly taxes on other income.

[davem4616]

Taxes are withheld on our RMD's and on our annuity payments and on a small pension....everything else I owe, I pony up at tax time

I never want to receive a refund....Uncle Sam doesn't pay me interest and I hate having to wait for my money to be returned

[asianthree]

For any of our distribution we have choice to withhold. We do not.

[Stu from NYC]

If you do not pay enough taxes during the year the IRS will levy a fine. This is why we have our CPA tell us what must be paid now.

[manaboutown]

If I need medical advice I see an MD; for legal advice I talk with an attorney specializing in the area of law concerning me. It is a slam dunk I check with my CPA on all tax issues and a tax attorney when necessary.

[retiredguy123]

If you use TurboTax to prepare your taxes, the software will calculate the 4 quarterly payments you need to make to avoid any underpayment tax penalty for the next year, with the payments due on April 15, June 15, September 15, and January 15. As long as you make those payments on time, it doesn't matter how much your income increases, you will not owe a penalty. I would rather make the estimated tax payments myself than to allow another entity to do it for me. If I make an overpayment, I just apply it to the next year's return. I never get a refund.

[dewilson58]

Originally Posted by retiredguy123

If you use TurboTax to prepare your taxes, the software will calculate the 4 quarterly payments you need to make to avoid any underpayment tax penalty for the next year, with the payments due on April 15, June 15, September 15, and January 15. As long as you make those payments on time, it doesn't matter how much your income increases, you will not owe a penalty. I would rather make the estimated tax payments myself than to allow another entity to do it for me. If I make an overpayment, I just apply it to the next year's return. I never get a refund.

Rates are so low, I always under pay.

[Bill14564]

Originally Posted by retiredguy123

If you use TurboTax to prepare your taxes, the software will calculate the 4 quarterly payments you need to make to avoid any underpayment tax penalty for the next year, with the payments due on April 15, June 15, September 15, and January 15. As long as you make those payments on time, it doesn't matter how much your income increases, you will not owe a penalty. I would rather make the estimated tax payments myself than to allow another entity to do it for me. If I make an overpayment, I just apply it to the next year's return. I never get a refund.

I would be careful with that advice. I am working out a strategy to avoid a penalty next year; my income increased this year and resulted in a penalty.

As dewilson58 points out, rates are low and my penalty is very small. Still, I would like to avoid it for next year.

[retiredguy123]

Originally Posted by Bill14564

I would be careful with that advice. I am working out a strategy to avoid a penalty next year; my income increased this year and resulted in a penalty.

As dewilson58 points out, rates are low and my penalty is very small. Still, I would like to avoid it for next year.

For most taxpayers, your estimated payments need to equal or exceed the amount of the total tax paid in the previous year. The total tax is shown on Line 24 of the 2021 tax return. You divide that number by 4 and make that payment 4 times during the next year. For some higher income taxpayers, the formula is a little different. But, Turbotax calculates the amounts either way. So, even if you have a huge income increase in 2022, you still will not owe a tax penalty. I have been doing it that way for over 30 years, and never owed a tax penalty.

[dewilson58]

Originally Posted by retiredguy123

For most taxpayers,....................So, even if you have a huge income increase in 2022, you still will not owe a tax penalty. I have been doing it that way for over 30 years, and never owed a tax penalty.

In a prior life..............same advice I gave out.
But personally, I keep my money and make money on it, easily cover the penalty and buy a pizza with the excess earnings.
Quarterly estimates is good advice.

[asianthree]

Originally Posted by Stu from NYC

If you do not pay enough taxes during the year the IRS will levy a fine. This is why we have our CPA tell us what must be paid now.

All of our money is distributed on 12/05. That way no worries of penalty. Our financial guy, CPA and tax attorney are all on the same page every year. Even when we have sold our houses never listed until 11/1, closing on or before 12/29