Craig Wear, CFP®Craig Wear, CFP® | Expert in Roth Conversions & Tax-Efficient Retirement Strategies for IRA Millionaires

How to Calculate Your Estimated Tax Payments for Roth Conversion

25 Jul 2024 · 1 min

Watch on YouTube

0:39

This short YouTube explainer (by Craig Wear, CFP®) describes how to calculate estimated tax payments for a Roth conversion using the IRS "safe harbor" rules: taxpayers should either pay at least 90% of their projected current-year tax liability, or satisfy a prior-year safe harbor by paying 100% (if AGI ≤ $150,000) or 110% (if AGI > $150,000) of last year’s tax. The clip gives a numeric example (projected taxes $100,000 → pay $90,000) to illustrate.

Questions this video answers

90% of projected current-year tax liability.

110% of last year’s tax.

100% of last year’s tax.

$150,000.

Chapters

You want to at least pay in 90% of what you owe for this year to avoid a penalty. So if you calculate and you project that your total taxes are going to be 100,000, you want to at least get 90,000 paid in, or 110% of your total taxes from last year can get paid in. That's if you have adjusted gross income above 150,000. If your adjusted gross income is below 150,000, then then that safe harbor test is 100% of your last year taxes. So it's pretty simple. You either pay 90% of what you would owe this year, or you make sure you get 100 or 110% of last year's taxes paid in. That's pretty simple.