Hello,
Can I use the method "100% (110%) of your actual 2020 federal taxes" to calculate my 2021 estimated tax even my income in 2021 will be much higher (because of large capital gain in stock market).
I used TurboTax to calculate the estimated tax and it showed me below numbers (I rounded these numbers):
*100% (110%) of your actual 2020 federal taxes ($150,000)
*100% of your estimated 2021 taxes ($300,000)
I would like to use the first method to pay estimated tax but also would like to avoid the penalty and interest from IRS.
Question 1 -- If I use the first method above, IRS will Not charge me for the penalty, correct?
Question 2 -- if I use the first method above, will IRS charge me for the interest for insufficient estimate tax ? If yes, what is the interest rate?
Your help is greatly appreciated.
