I sold my house in August 2023 for a large profit. I want to determine estimated Federal and California State taxes to avoid a penalty. Next Federal quarterly payments are due September 15, 2023 and January 16, 2024.
TurboTax support stated the following:
In most cases, to avoid a penalty, you need to make estimated tax payments if you expect to owe $1,000 or more in taxes for the year—over and above the amount withheld from your wages or other income. (TRUE FOR US) In some cases, though, the $1,000 trigger point doesn't matter.
If your prior year Adjusted Gross Income was $150,000 or less (TRUE FOR US) , then you can avoid a penalty if you pay either 90 percent of this year's income tax liability or 100 percent of your income tax liability from last year (dividing what you paid last year into four quarterly payments). This rule helps if you have a big spike in income one year, say, because you sell an investment for a huge gain or win the lottery.
I take that to mean that can pay 25% or slightly more of last years taxes before September 15, 2023 and January 16, 2024 to avoid a penalty. Is that correct?
Does the same apply to California estimated tax?
