To make the down payment for a home, I sold some stocks and incurred a big chunk of capital gains (a mix of long-term and short-term). This occurred early May, and I know the next estimated taxes due date is 6/15.
I work a regular salaried job so my main taxes are already paid through withholdings on my salary.
I've read up on the safe harbor rules about estimated taxes, which says I would not be penalized for not making estimated tax if any of these are true:
- Come tax filing, after deductions and credits, it shows I owe less than $1,000
- Come tax filing, it shows I already paid 90% of the taxes I owe for 2024
- Come tax filing, it shows I already paid an amount equivalent to 100% of taxes I owed in 2023
My questions:
- Since taxes are technically "pay as you go", would a large influx of capital gains/income in Q2 mean I actually have to clear a larger tax bill for Q2 (6/15)? Does that mean I could still be penalized since my withholdings may not be enough so far even if I manage to meet any of the 3 criteria by the end of the tax year?
- If I know I can meet the criteria above by the end of tax year, do I still have to pay the estimated tax on time? I'm light on cash right now, but I can make some payments later to be in safe harbor. Would I still be penalized for not paying estimated taxes on time? What about interest on taxes owed?
Thanks!
