Roth Conversion tax payment (cash)

Forum|Forum|11 months ago
April 10, 2025
1 reply
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I want to do a Roth Conversion ($88,000) this month and I've already received my 2024 tax refund. I'm 67, not collecting S.S., $15k pension income, after my $17k standard deduction which keeps me in the 22% bracket for the conversion. My question - how exactly do I properly pay the tax due ($15,312) after opening and funding the Roth to avoid any penalty? I have cash. I've read elsewhere that you can simply go to "IRS.gov/payments" and make the estimated payments. Is this correct? Do I have to submit any forms as well?

Opus 17

Employee

Yes, you can go to www.irs.gov/payments. You would select 2025 as the tax year and estimated taxes as the reason. You would get a receipt, keep that for when you file, but you don't need other paperwork.

For a conversion done in April, and with no withholding, the IRS will want to see payment in full by June 15, and you will have to use the annualized method of calculating the penalty on your tax return. Or, you can pay 1/4 of the taxes on or before April 15, June 15, Sept 15, and Jan 15, 2026, and you would not have to use the annualized method. (Because the IRS wants tax payments spread out evenly over the year.). So you can actually make slower payments and keep your money longer if you make one early payment (before April 15, even if the conversion settles after April 15), then you can make 3 more payments spread out.

Taxstar58Author

Thanks Champ! 🙂 ...so, if I'm not able to get it in under the gun in April, any tax on my conversion done this year would have to be paid in full? - and then figure out the annualized penalty? Is that done using form 2210 or just when I file next year?

fanfare

Employee

If your quarterly withholding plus estimates for 2025 are at least 100% / 4 = 25% ( 110% / 4 for certain high income taxpayers) of your 2024 tax, there will be no penalty on your 2025 tax return, regardless of any jump in income.
you are protected from a sudden capital gain or spike in income e.g. Roth conversion.at year end.
you know your prior year's tax when you file by April 15, which is also the first estimated tax payment due date.

@Taxstar58