Capital gains vs W2

So let's start here Who must pay estimated tax : 

 

Individuals, including sole proprietors, partners, and S corporation shareholders, generally have to make estimated tax payments if they expect to owe tax of $1,000 or more when their return is filed.

 

So, if the capital gains are significant you may need to make estimated tax payments.  Short-term gains are taxed at your marginal income tax rate, but long-term capital gains (Assets held for a year or more) are taxed as follows (This is taxable income (Line 15)  and not adjusted gross income (Line 11):

 

Tax rate	Single	Married filing jointly
0%	$0 to $47,025	$0 to $94,050
15%	$47,026 to $518,900	$94,051 to $583,750
20%	$518,901 or more	$583,751 or more

 

If the capital gains are all long term, you would need $1,000 in capital gains to have estimated tax liability assuming your the tax withholding on the W-2 puts you at $0 owed.   If you have a W-2 job, I often advise clients to adjust their Form W-4

 

You can use this Turbo Tax calculator to help you: W-4 Calculator 2024 

 

With no W-2 an no other income your long-term capital gains would be $0, since you would have no other taxable income.  

 

You could be impacted by this though:

 

The Net Investment Income Tax is imposed by section 1411 of the Internal Revenue Code. The NIIT applies at a rate of 3.8% to certain net investment income of individuals, estates and trusts that have income above the statutory threshold amounts.

 

Individuals will owe the tax if they have Net Investment Income and also have modified adjusted gross income over the following thresholds:

 

 

Thank you so much for your question  @kohzilla 

 

Be well and safe!

 

Marc T.

 

Turbo Tax Expert

27 Years of Experience Helping Clients