2017 Estimated tax or skip it?

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In 2015 and 2016, I converted some regular IRA to ROTH conversion IRA for the long term benefits.  About $25,000 converted each year  I was not financially healthy enough to pay the taxes on the whole ball of wax.  I paid estimated taxes each year to allow for taxes on the IRA to Roth conversion.  Now comes 2017 current year. I am now 70 years of age and am not allowed to do more conversions to Roth.
Without the Roth conversions, my tax picture is under control without the estimated tax payments.   TurboTax wants me to pay estimated taxes based on my tax picture for 2016. It does not account for the changes for 2017.  They like the concept of paying estimated taxes based on the previous year to avoid underestimated taxes for 2017. 

Because of bad judgment on some oil company bonds, I have enough capital losses that any stock investment capital gains will be offset. With that offset, my taxable income should not be affected by my beginning to collect Social Security.   My part time job is about the same income as the standard deduction.  My IRA Minimum Distribution is about 5000.  My IRA pot is about $250,000 if I need money, I don't have to go on welfare.  My budget is balanced.  The house is paid for and the car loan will be paid off this year.  The car is in good shape.
I am leaning toward skipping 2017 estimated tax payments.  Options?


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The software simply extrapolates based on 2016. Ignore the TT recommendation since your 2017 tax situation very different than 2016.
ETA: If you do find later in the year that the income/tax situation is different than projected now, you can always make a payment then (if a safe harbor provision doesnt cover your situation) or simply increase withholding in your part-time job.

JW10 said:   I am now 70 years of age and am not allowed to do more conversions to Roth.

  That's incorrect - you can always do a Roth conversion.  If you're 70.5 then you will have to take your traditional IRA's RMD first, however.


You need to pay at least 90% of the tax you will owe or you will incur penalties and interest. TurboTax allows you to adjust your forecasted income do customize your estimated tax payments. Sounds like you may owe penalties and interest for underpayments in 2015 and 2016?

2015 did involve an underpayment penalty .. everything relative to 2015 has been paid and settled last Spring
2016 TurboTax preliminary (meaning as far as I have gotten, but under review by me) adjusted by paid estimated tax payments projects overpayment (green) by about $1500.00.  TurboTax has not indicated anything about an underpayment penalty for 2016 Federal.
TurboTax is projecting an underpayment penalty for my state income tax despite an overpayment total of about $500.00. I may take my state filing to the local state revenue department since I made state estimated payments on or ahead of schedule to help me understand that projected penalty.

There's both too much information and not enough information.

What is your expected total tax liability for 2017 (not how much you will pay in April, the total tax you will pay)? Sounds like this is under $1,000 which is the end of the analysis.

99% of my income is W-2 income each year. TT spits out estimates every year for me, which I completely ignore.

Just pay attention to what your income is going to look like for 2017 throughout the year. Ensure you have enough taxes withheld to have the lesser of either 90% of 2017's liability or 110% of 2016's liability sitting in Uncle Sam's wallet by year end.

I am leaning toward leaving the overpayment of 2016 tax year as carryforward into tax year 2017. IF I do that, estimates under 90% of 2017 expected is under $1000.00.
Most of my taxable income is NOT subject to withholding. A question outstanding which is the great unknown is if I will make enough taxable income to push my Social Security into taxable income. Most of my taxable income outside of Social Security and a very modest one day a week part time job is investment income and if I decide to pull some IRA money beyond MDR which I did in January (Only MDR). That MDR money was used to fund some stock trades that have already generated in pocket dividends and capital gains which will be offset by capital loss..

TT tends to be conservative and suggests paying estimated taxes even if not necessary. It suggested it for me despite my situation falling under safe harbor (I paid more than 90% of taxes).

For the 2017 estimates, the rule is pay 100% (110% if income is very high i.e. $150K for married FJ) of the 2016 taxes or 90% of the 2017 to avoid penalties. Just look at line 60 on your 1040 for 2016 and make sure that amount is paid by April 15, 2018. When calculating your estimates, be sure to include tax withheld from W2 or any other form of witholdings.

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