Use of 1040-ES to Supplement 1099-R Withholding?

I gather that 1099-R withholding is treated like W-2 withholding, in that it's considered to be done evenly over the year regardless of when it actually happened. So long as the amount withheld is within $1000 of what you owe or you meet some other more complicated requirements, there's no penalty. See the instructions for form 2210 for much, much, more detail.

That's possible. The calculations are a bit tedious though, and you have to file long form 2210 with your tax return. I suppose you can just send 25% of your capital gain in each quarter -- assuming that is your tax bracket. From bankrate.com: 25% Single $36,251 - $87,850, MFJ $72,501 - $146,400. You still have to file long form 2210.

Yes, I like this approach best. But what if the your 1099-R monthly gross is less than the additional tax due. I mean what if you have $500,000 in capital gain, whereas your pension/IRA distribution is just $10,000 a month before taxes.

Yes, there is a penalty because the Q1 estimated payment was not received on time, the Q2 not on time. The Q1 penalty is 3% a year on the underpayment from

Second, can you take advantage of prior year safe harbor? If your total tax bill in your 2012 return was say some small number like $100, then you only have to pay $110 through withholding or EQUAL estimated on-time payments. You can pay the difference on 4/15/2014 and have no penalty. So if you owe $30,000 in taxes, just pay the remaining $29,890 on 4/15/2014 and there is no penalty because of prior year safe harbor.

Also, don't forget about state taxes.

So long as tax is withheld anytime during the tax year, it doesn't matter when, it is considered timely. This is different from estimated tax payments that are expected to be paid roughly in the same time frame that the income occurred.

So if you have the ability to control the amount of tax withheld right up to December (and you have enough income that it covers the tax that you need to withhold) that is probably a better way to manage tax payments than by paying estimated taxes.

As an example, in 2011 I found I had severely underwithheld so in late December took an IRA distribution with 90% federal and 9% state tax withheld (ratio required by the administator rules).

Jay Wiedwald Oakland, CA

when, it is considered timely. This is different from estimated tax payments that are expected to be paid roughly in the same time frame that the income occurred.

Aha. "it doesn't matter when, it is considered timely" is the key. I can start now to increase my withholding to cover the first sale. I will increase the withholding again when I make future sales. Thanks for the tip

December (and you have enough income that it covers the tax that you need to withhold) that is probably a better way to manage tax payments than by paying estimated taxes.

December took an IRA distribution with 90% federal and 9% state tax withheld (ratio required by the administator rules).

Far easier would be to make sure that at least the amount of your 2012 total tax is withheld during 2013. Then you can wait until 4/15/2014 to pay the rest of it. See Publication 505.

Phil Marti VITA/TCE Volunteer Clarksburg, MD

This whole thread is about how to increase your withholding to cover the tax on some large stock sales. The title says 1099-R withholding, so we assume that the stocks are in a retirement plan. As such, there is NO tax impact when they are sold. There are no capital gains taxes to be paid - EVER. It's all going to be ordinary income, WHEN YOU WITHDRAW IT, not when the sales are made.

Don EA in Upstate NY

tax is withheld during 2013. Then you can wait until 4/15/2014 to pay the rest of it. See Publication 505.

Great. Covered on page 24, 2b of the chart. I just need to increase my withholding enough to make sure it is equal to or greater than my 2012 total tax. Thanks for the tip.

These stocks are NOT in a retirement plan so there is a tax impact. Hopefully, some of the sales can be held off until the long term capital gains rate applies.