Best way to pay SEPP Federal Taxes?

L1: Best way to pay SEPP Federal Taxes?
How do you pay your federal taxes on SEPP withdrawls? Do you have your custodian transfer a speciifed amount off the top of each withdrawl to the IRS or do you write a quarterly check to the IRS? Looking for the most reliable problem free way so i don”t have to receive any IRS correspondence/questions etc.
Thanks,
Usagolfho
2007-10-04 05:35, By: usagolfho, IP: [69.84.97.119]

L2: Best way to pay SEPP Federal Taxes?Hello Usagolfho:
Remember that a SEPP plan unto itself only creates a taxable event or series of taxable events within a calendar year. Further, it is these SEPP distributions PLUS all other taxable events in your life that will establish your total tax liability for any year. That said, I do not like withholdings from distributions but instead prefer making quarterly estimated payments. The easiest solution is to look at your prior year”s tax liability; add a little bit for cushion or whatever you know about in the coming year which will increase your taxable income and divide by 4. Then send the checks to Uncle.
TheBadger
wjstecker@wispertel.net
2007-10-04 05:59, By: TheBadger, IP: [72.42.66.103]

L2: Best way to pay SEPP Federal Taxes?There are several aspects to tax payments. First, there is the “safe harbor” rules from the IRS. Basically, there is no penalty for underestimating/withholding if your total payments are at least $1 more than the prior year”s TOTAL TAX (line 63), provided you had a tax liability last year. However, if last year”s AGI (line 37) was $ 150,000 or more ( $ 75,000 if MFS), then the “safe harbor” is 110% of last year”s tax. There is another “safe harbor” which is 90% of the current year”s total taxes, but that is an after the fact result, not a plan.
Second, you should project what your total tax will be for this year. Also, look at your withholdings and estimates to date in conjunction with that figure and the “safe harbor figure” above. But, you cash needs must take into account whether you take withholdings from each withrawal from the SEPP 72-T, or where you will get the funds for estimated tax payments.
Third, many brokers do not take withholdings of state income taxes (and none take local tax withholdings), so you”ll have to plan for those also.
Fourth, if you lost your job or got a lower paying one, you probably want to ignore the “safe harbor” calculations, and merely project your current year”s situation. 2007-10-04 10:27, By: dlzallestaxes, IP: [141.151.78.71]

L2: Best way to pay SEPP Federal Taxes?usa…,
I have the FED and State taxes withheld by both Vanguard and Schwab when they make two different SEPP plan payments to me. I had already missed a Qtrly estimate for MASS earlier this year, thinking they were always 3 months apart, only to find when I re-read the instructions that I shd have followed my April Qtrly pmnt with one two months later.. in June– and not July as I had planned to do. At that point I got Schwab to start paying State taxes as well. (In 2006 they were not withholding state taxes, but added that option in 2007.) I assume it follows the FED Qtrly due dates, which can easily slip by, until you realize that you forgot to do those tax payments. To me, it is one less thing to worry about remembering to do (on time!) 4x per year. I also have taxes withheld on my pension checks each month., The 1099-R”s that I get will list these taxes withheld, just like my W2 used to list them, so it is easy to do tax returns with that info. That is just my preference. KEN2007-10-04 11:27, By: Ken, IP: [151.199.61.30]

L2: Best way to pay SEPP Federal Taxes?Thanks all for your response.2007-10-04 18:32, By: usagolfho, IP: [69.84.97.119]