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Tax question about paying estimates
Posted on 8/3/17 at 6:39 pm
Posted on 8/3/17 at 6:39 pm
If you sell stock and get a 15k tax liability, do you need to pay a quarterly estimate on that so that you don't have to pay interest and penalty at the end of the year?
2
Posted on 8/3/17 at 10:19 pm to LSU1018
Short answer is yes.
The penalty might be avoided based on a lot of different things, or not even apply at all. Safe bet and easier to budget for, would be to send in the check on 9/15 with the estimated tax on the sale.
The "penalty" is the underestimation penalty, reported on Form 2210 (when required). You can take a look at those instructions if you want. The bottom line is that it is generally about 4% annual interest on the underpayment of the tax from the IRS' pay as you go system.
ETA: There would be no late payment penalty or late interest (in addition to the underpayment penalty above) that would apply unless you didn't have the tax paid by 4/15
The penalty might be avoided based on a lot of different things, or not even apply at all. Safe bet and easier to budget for, would be to send in the check on 9/15 with the estimated tax on the sale.
The "penalty" is the underestimation penalty, reported on Form 2210 (when required). You can take a look at those instructions if you want. The bottom line is that it is generally about 4% annual interest on the underpayment of the tax from the IRS' pay as you go system.
ETA: There would be no late payment penalty or late interest (in addition to the underpayment penalty above) that would apply unless you didn't have the tax paid by 4/15
This post was edited on 8/3/17 at 10:33 pm
Posted on 8/3/17 at 10:22 pm to LSU1018
Google IRS safe harbor provisions for 2017
Here you go. This should really be added to the sticky thread. This question comes up too much.
LINK
General rule. In most cases, you must pay estimated tax for 2017 if both of the following apply.
You expect to owe at least $1,000 in tax for 2017, after subtracting your withholding and refundable credits.
You expect your withholding plus your refundable credits to be less than the smaller of:
90% of the tax to be shown on your 2017 tax return, or
100% of the tax shown on your 2016 tax return (but see Special rules for farmers, fishermen, and higher income taxpayers , later). Your 2016 tax return must cover all 12 months.
Estimated tax safe harbor for higher income taxpayers. If your 2016 adjusted gross income was more than $150,000 ($75,000 if you are married filing a separate return), you must pay the smaller of 90% of your expected tax for 2017 or 110% of the tax shown on your 2016 return to avoid an estimated tax penalty.
Here you go. This should really be added to the sticky thread. This question comes up too much.
LINK
General rule. In most cases, you must pay estimated tax for 2017 if both of the following apply.
You expect to owe at least $1,000 in tax for 2017, after subtracting your withholding and refundable credits.
You expect your withholding plus your refundable credits to be less than the smaller of:
90% of the tax to be shown on your 2017 tax return, or
100% of the tax shown on your 2016 tax return (but see Special rules for farmers, fishermen, and higher income taxpayers , later). Your 2016 tax return must cover all 12 months.
Estimated tax safe harbor for higher income taxpayers. If your 2016 adjusted gross income was more than $150,000 ($75,000 if you are married filing a separate return), you must pay the smaller of 90% of your expected tax for 2017 or 110% of the tax shown on your 2016 return to avoid an estimated tax penalty.
This post was edited on 8/3/17 at 10:27 pm
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