The IRS generally wants you to pay your tax liability to them throughout the year and charges you 8% interest if you don’t. If you didn’t pay enough throughout the year and find yourself still owing money to the IRS at the end of the year, consider taking an IRA withdrawal by year-end and withholding all of it. You then can take money from your checking account and contribute that money back to your IRA as a rollover (if done so within 60 days of the withdrawal). Your cash flow will be the same as if you gave the money directly from your checking account to the IRS but by using this two-step process, you will avoid paying 8% interest to the IRS since the IRA withholding is deemed to have been paid equally throughout the year even though it was actually paid at year-end.
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