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I have a tax withholding question - I am retired so I don't…

I have a tax withholding...
I have a tax withholding question - I am retired so I don't have withholding on W2. My last year tax liability was below $1000 so I didn't send pre-payment to IRS. This year my tax will be higher. I haven't send in any payment yet, but I plan to get an traditional IRA distribution before the end of the year, which will make my tax liability much higher (over $1000).To avoid tax underpayment penalty, I plan on having the financial institution withhold certain % of IRA distribution to make the tax payment equal or higher than my last year's tax. I just want to confirm this with a tax expert to make sure that this will indeed allow me to avoid the penalty.Thank you!
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Answered in 7 minutes by:
12/16/2017
Chad EA, CFP ®
Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional
Category: Tax
Satisfied Customers: 2,332
Experience: Federally licensed IRS Enrolled Agent, Certified Financial Planner (R), MBA
Verified

Welcome to JustAnswer!

My name is***** will assist you today.

To avoid the under payment penalty you must withhold enough from your IRA distribution, completed before the end of 2017, to meet any one of the three rules outlined below.

Taxpayers will avoid the underpayment of estimated tax penalty if:

1) Owe less than $1,000 in tax after subtracting their withholdings and credits,

OR

2) If they paid at least 90% of the tax for the current year,

OR

3) 100% of the tax shown on the return for the prior year, whichever is smaller.

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If you withhold enough to make the tax payment equal to or higher than your last years tax liability you will meet standard #3 listed above and no underpayment penalty will be assessed.

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If you have any additional questions at all please let me know! My goal is to ensure you receive 100% satisfaction.

At the conclusion of our conversation please take a moment to rate and accept my answer by clicking on three stars or more. A positive rating of 5 stars or more is always appreciated. Thank you!
Chad EA, CFP ®
Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional
Category: Tax
Satisfied Customers: 2,332
Experience: Federally licensed IRS Enrolled Agent, Certified Financial Planner (R), MBA
Verified
Chad EA, CFP ® and 87 other Tax Specialists are ready to help you
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Customer reply replied 5 months ago
Thank you!

Thank you for the rating!

If you do have additional questions please let me know

Have a great weekend.

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Chad EA, CFP ®
Chad EA, CFP ®
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Category: Tax
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Experience: Federally licensed IRS Enrolled Agent, Certified Financial Planner (R), MBA

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