Could Require You to File Estimated Payments
The IRS expects you to pay your taxes within a certain time frame in which you earn the money.
- Earn January – March, pay by April 15
- Earn April – May, pay by June 15
- Earn June – August, pay by September 15
- Earn September – December, pay by January 15
Normally, this is handled for you by your employer (through payroll deductions). But if you convert a large IRA, you could be required to file IRS Form 1040-ES, making payments roughly each quarter. If you don't, you could incur interest and penalties.
Please see next blog post for Roth IRA conversion complication #6.