humblecoder wrote: Wed Oct 01, 2025 8:35 am
toddthebod wrote: Wed Oct 01, 2025 8:24 amNot to pile on, but form 2210 Schedule AI is potentially a lot of work, as it requires accounting for when you received your income throughout the year (i.e., looking up your YTD pay stubs, dividends, interest , etc., as of the end of each estimated tax “quarter”), as well as each deduction if you itemize. Then you effectively have to complete a full tax return for each quarter, although software can greatly simplify this step.
Technically the simplest solution is to target the prior year tax safe harbor in the first place, but that can result in making large interest free loans to the government if your income varies a lot year to year.
Thank you for the clear explanation. Having never completed Form 2210, I did not realize that it was so onerous.
I do agree that the simplest solution would be to target your withholding / estimated tax payments to meet the safe harbor, but I understand that this might have complications in certain situations, as you point out.
Appreciate the knowledge
I would not call form 2210 onerous, though it took a little bit of time to learn the first time. After that, for me, it’s been a piece of cake. For us, it’s fairly straightforward because I’m only entering interest from checking/savings, distributions from my stock fund (with a conservative qual/nonqual split), distributions from money markets in our taxable account, Cap gains from stock sales, and withdrawals from our TIRAs.
But it does require tracking. I have a nice spreadsheet for each of the 4 IRS payment periods with information for each month. At the beginning of the month I go in and replace my original guesstimates with actual numbers. It takes all of ten minutes for me. When one of the IRS periods is done, I use the personal finance toolbox to calculate the annualized tax. Then my spreadsheet calculates the incremental tax owed for the current period and adds a little margin and then I log into the IRS website and make the payment. This step usually takes me 15 minutes to do the calculations. I let it sit for a day and I go back through one last time, checking the data, then make the payment. Late December, I do my Roth conversion and the January tax payment comes from money already in checking for baseline taxes and a sale of stock in our brokerage account for the incremental tax owed due to the Roth conversion.
At tax filing time, I use H&R Block software. They could make this part a little bit easier – that is, they do require you to manually enter some data into form 2210. They auto-populate only a small amount of info, even though they have more info that they could auto-populate by the time I’m at that step (I’ve sent in a suggestion to them about this). But since I’ve been tracking this stuff anyway, I already have the remainder of the data ready to put into the form. Once I’ve completed everything there, I go back into my spreadsheet and put in the actual qual/nonqual/199A splits, compare data I have against 1099 data, and then compare total tax that was owed for the year. Last year H&R Block vs. my tracker + personal finance toolbox were within $5 of each other for total taxes owed. Good enough.
For sure YMMV.
We don’t do any withholding throughout the year. But I do keep track of what we’ve paid YTD as well as what the safe harbor is for the current year – if I become incapable, my DW can send in a final payment at any time and be good for the year. Roth conversions will stop and she can hire an accountant from that point on.
Cheers.
