Amount of Withholding Required to Avoid Penalty Both my wife and I are older than 70-1/2 years, so minimum required distributions ("MRD") from our 401ks began a couple years ago. We file married, joint returns.
We decided to purchase a second home in Arizona where winters are milder than where our primary residence is located. We took a distribution from our combined 401k whose amount exceeds the MDR to pay cash for the home in Arizona. We did not have any withholding taken to pay income taxes at that time.
I now plan to take an additional distribution to pay federal and state income taxes in order to avoid owing penalties and interest on our 2015 returns. Documentation I have found on the internet has left me confused about the amount/percentage of adjusted gross income I am required to pay the IRS.
One set of instructions (IRS 2015 Form 1040-ES) would seem to indicate I can get by paying the "Required annual payment based on prior year's tax" while a different article would seem to indicate I can get by with 10% FIT withholding and 5% for state.
I remain, slightly confused. Help will be appreciated. |