Good afternoon, Bissawo!
You asked about long term capital gains,taxes, how much you should withhold for taxes and how you can pay in advance to avoid owing any penalties.
The first step in how to calculate capital gains tax is to generally find the difference between what you paid for your asset or property originally and how much you sold it for, minus any fees or commissions, that were paid.
The Long-term capital gains tax ,is a tax applied to assets that were held for more than one year. The usually more, favorable, long-term capital gains tax rates are 0%, 15% and 20%, depending on your filing status and total taxable income.
To help calculate how much you may want to pay in advance, I would recommend using a capital gains tax calculator. Now to avoid any underpayment penalties on these gains, you will need to make an estimated tax payment by the 15th of the moth following the end of the quarter, the sales take place. For example: if the capital-gains distributions occur in the fourth quarter, (October-December of 2024), you. would need to make a sufficient 4th quarter estimated payment by January 15th, 2025 to cover the capital gains tax You should keep in mind though, that avoiding the underpayment penalty all together, requires that you have paid in, or withheld a sufficient amount of taxes to cover your total tax obligation for the entire year.
Please checkout the links below, for additional tools and guidance.
Thank you for joining us today and have a great rest of your day!
Terri Lynn, EA
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Terri Lynn
