Hi,
I recently sold a rental property and will owe a significant amount in capital gains taxes for 2020. I’m trying to figure out if I need to pay estimated taxes. I feel like I should have to pay them, but then I read this rule on irs.gov:
“Generally, you must make estimated tax payments for the current tax year if both of the following apply:
- You expect to owe at least $1,000 in tax for the current tax year after subtracting your withholding and refundable credits, and
- You expect your withholding and refundable credits to be less than the smaller of:
- 90% of the tax to be shown on your current year's tax return, or
- 100% of the tax shown on your prior year’s tax return. (Your prior year’s tax return must cover all 12 months.) “
I’m having a hard time interpreting what it means. If my withholdings are similar to last years, I should be ok?
Any insight with this would be appreciated!
Thank you.
