estimated payments or increase withholding?

[bortman]

Summary:
• married filing jointly
• wife works full time and plans to for ~5 more years
• I RE'd in June 2018 with W2 income for 6 months; most of that was eaten up by maximum 403b and 457b contributions
• I will likely have little-to-no W2 income going forward
• I did my first IRA to Roth conversion ($35,000) in Dec 2018
• I'm hoping to covert ~$30,000 per year for the foreseeable future

I'm working on my 2018 federal tax return (using TaxAct) and the software is encouraging me to make estimated payments for 2019. Right now it looks like I owe about $3200 since I didn't withhold anything for the conversion.

My wife is currently working full time. She wondered if it makes sense to simply increase her federal withholding rather thanme making estimated payments to cover the annual IRA to Roth conversion.

Will the IRS be satisfied if she increases her withholding? Or would they rather that I make estimated quarterly payments since I'm the one doing the conversion?

[MDM]

Will the IRS be satisfied if she increases her withholding? Or would they rather that I make estimated quarterly payments since I'm the one doing the conversion?

The IRS doesn't care.

The choice is yours.  One can make reasonable arguments either way.

If you make only conversion per year, and her withholding covers all tax due on income other than the conversion, you need make only one estimated payment (in the same "quarter" as the conversion).  See form 2210 for the definition of "quarter" that applies here.

Don't forget state tax also.

[Catbert]

As MDM said, the IRS doesn't care.  Extra withholding from you spouse is probably the easiest.   However, if you have any interest in churning credit cards, paying your quarterly taxes with a new card is an easy way to help meet minimum spend.  Yes, there is a fee (1.87% IIRC) but worth it to get a sign up bonus.

[terran]

One aspect in which the IRS does care is that estimated taxes need to happen as the income is earned or be paid in 4 equal installments. Withholding is automatically assumed to have been paid at the right time no matter when in the year it is actually withheld.

[Much Fishing to Do]

Filing jointly doesn't matter where the money comes from.

I fairly often make a first quarter estimated tax payment (and only that one for the year) to cover stuff like this as its just easiest (The first q payment is due at the same time I'm doing all my other tax stuff, etc, and if done first quarter of course its not late, etc, and I consider the 'loss' of paying early whatever the Money market interest on the money is, so here we're not talking about much...).

Of course, it sure seems unnecessary to do this here for multiple possible reasons, including given you worked half of last year and your conversions will be about the same that you're gonna owe less this year in total, and thus are covered by the safe harbor and can just wait and pay it all next April.