A taxpayer who converts $75,000 from a traditional IRA to a Roth IRA in February 2026 can face an estimated charge of about $1,100 by paying the tax with the return in April 2027. The conversion counts as ordinary income for tax year 2026, even though the tax bill arrives later.
That delay spans 14 months from the conversion to the return payment. The IRS treats income tax as payable during the year income is earned, so paying the full balance later does not necessarily erase missed installments.
The charge is not tax on the transfer itself. It is an estimated underpayment penalty tied to the timing and amount of tax paid during the year.
The estimate depends on the taxpayer’s bracket and payment history. A taxpayer who already met the safe harbor through withholding or timely payments may owe no charge.
There are ways to reduce or avoid it. The numbers below illustrate how sharply the estimate changes by bracket.
The estimated charge changes with the tax bracket
| Marginal bracket | Tax attributed to conversion | Estimated charge |
|---|---|---|
| 22% | $16,500 | About $768 |
| 24% | $18,000 | About $838 |
| 32% | $24,000 | About $1,117 |
The headline figure of about $1,100 corresponds to the 32% example. In the 22% example, the estimated charge is closer to $770. These are illustrative estimates, not a fixed charge for every conversion.
For single filers in 2025, the 32% rate began at $197,301 in taxable income. The calculation depends on the applicable tax rate and the taxpayer’s other income and payments.
Four installments set how long unpaid amounts accrue
The IRS divides the required annual payment into four installments, each generally one-quarter of the total. Their due dates are April 15, June 15, September 15 and January 15 of the following year.
Each unpaid installment accrues separately from its due date until it is paid or until the 15th day of the fourth month after the tax year ends. For the 2026 tax year, that endpoint is April 15, 2027. The earliest installment remains outstanding longest.
The statutory rate is the Federal short-term rate plus 3 percentage points, and the IRS resets it quarterly. As of October 20, 2026, the Federal Reserve target range topped out at 4%, producing a working estimate of about 7% for the charge.
The calculation uses simple interest, not daily compounding. Paying sooner can prevent the charge, but it also means giving up use of the cash earlier. A comparison using a 10-year Treasury yield of 5.15% illustrates that opportunity cost.
Prior-year payments and withholding may satisfy the safe harbor
Taxpayers generally avoid the charge when withholding and timely payments cover the lesser of 90% of the current year’s tax or 100% of the prior year’s tax. For taxpayers whose prior-year adjusted gross income exceeded $150,000, the prior-year target rises to 110%; the threshold is $75,000 for married filing separately.
Meeting that test does not pay the remaining tax balance. It can prevent an installment charge while the taxpayer waits to file and pay the balance.
IRS Publication 17 advises taxpayers with conversion income that they may need to increase withholding or make payments during the year. Withholding counts as paid evenly across the year, regardless of when it was taken. A December withholding from an IRA withdrawal can therefore be credited across the installments.
Schedule AI can account for income received late in the year
The regular installment calculation treats income as if it arrived evenly through the year. Taxpayers whose income came later may use the annualized income installment method on Schedule AI of Form 2210 to calculate payments based on when income, deductions and other items actually occurred.
Schedule AI divides the year into periods ending March 31, May 31, August 31 and the close of the year. It recalculates income and tax through each period, with each period including the earlier months. A December conversion appears in the final period and may reduce or eliminate charges assigned to earlier installments.
Taxpayers using the method must attach Form 2210 to their return. The IRS calculates the charge by default and sends a bill; taxpayers seeking a lower calculation must complete the form. After a notice arrives, they cannot make the claim by phone without filing an amended return.
The calculation can take work. Schedule AI requires records such as bank statements, brokerage records and pay stubs to rebuild the year period by period. Preparers may skip the schedule when the cost of doing it exceeds the potential savings, and clients may need to ask for it.
Paying the annual amount by the first deadline can prevent the charge
In the 22% example, the conversion adds $16,500 in tax, or $4,125 per installment. A payment of $16,500 by April 15, 2026 covers the first installment, with the excess applied to later installments, preventing an underpayment period from starting in that example.
The April installment accounts for about $289 of the estimated charge over a full year of delay. The January installment adds about $71 over its shorter late period.
Withholding tax from the conversion itself can reduce the amount deposited into the Roth account. That trade-off differs from making a separate payment from other funds.
This article is for informational purposes only and does not constitute tax advice. Consult a qualified tax professional or CPA about your specific situation.
