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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10156
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I need to make an estimated tax payment because of IRA

Customer Question

I need to make an estimated tax payment because of IRA withdrawals and a Long-term profit on a sale of property. Can I do this online?
JA: The Accountant will know how to help. Please tell me more, so we can help you best.
Customer: We normally file annually. This year we sold property for a profit, $40,000 and are withdrawing about $20,000 from IRA accounts. I know that current withholding is not sufficient, so I need to make an estimated Tax payment to avoid an under withholding penalty.
JA: Is there anything else the Accountant should be aware of?
Customer: No
Submitted: 1 month ago.
Category: Tax
Expert:  Lane replied 1 month ago.

Hi. My name's Lane ... I can help here.

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Yes, you have several options for doing this on-line. YOu can also use the Federal EFTPS (Electronic Federal Tax Payment System) but that requires a pin be sent to you via mail.

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Just go here, and choose one of the options ... and when paying just be sure to indicate that this is to be applied to 2016 taxes

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https://www.irs.gov/payments

Expert:  Lane replied 1 month ago.

Just so you know, given that the reason for making estimated payments is to avoid the underpayment penalty, in circumstances where you have a one time spike in income for a given year, you MAY not have an underpayment penalty.

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See this from IRS (I'll unerline the pertinent part)

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Taxpayers will avoid this penalty if they either owe less than $1,000 in tax after subtracting their withholding and estimated tax payments, or if they paid at least 90% of the tax for the current year or 100% of the tax shown on the return for the prior year, whichever is smaller

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This does not, of course, lower the tax liability itself ... Just wanted to cover the bases for you.

Expert:  Lane replied 1 month ago.

Please let me know if you have any questions at all, before you rate me

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If this has helped, and you DON’T have other questions … I'd appreciate a positive rating (using the stars or faces on your screen, and then clicking “submit").

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Thanks!

Lane

I have a law degree, with concentration in Tax Law, Estate law & Corporate law, an MBA, specialization in financial accounting & tax, a BBA, and CFP & CRPS designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice, since 1986.

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