Prepayment on large capital gains taxes

[srzearin]

Hi,

For 2022, we expect to have a $10,000 capital gains tax liability that was realized in late March 2022.  We want to avoid an underpayment penalty but our current income tax withholding is not enough to cover taxes on this gain. 

Should we send in tax prepayments to the IRS and if so, how should we determine how much and would we just do so online?

Thank you, in advance.

[Critter-3]

You can up your withholding at your job for the rest of the year to cover this extra tax   OR  you can send in an estimated tax payment ...  https://www.irs.gov/pub/irs-pdf/f1040es.pdf

[Mike9241]

there will be no penalty for underpaying taxes if withholding and TIMELY estimated tax payments are either 90% of 2022 tax or 100% (110% if 2021 AGI was over $150k) of 2021 tax.

assuming withholding and estimated tax payments don't meet the criteria above: 

note you may be subject to an underpayment penalty since the income was generated in the first quarter and that quarter's estimated tax payment was due 4/18/2022,  if you say your additional tax will be $10K, $2,500 was due on that date another $2,500 on 6/15, then 9/15 and finally 1/15/2023, so you should pay $5K as soon as possible 

but there's no way to really know until you do your 2022 return. rather than estimates, you could increase withholding  

[fanfare]

@srzearin 

Do not change your W-4 for capital gains tax.

Go to IRS make a payment page and select "Estimated Tax".

you should know your tax bracket. That is the % amount to pay.