I am very very fortunate and was able to realize a $300,000 long-term gain from a stock sale. I am married and we had a taxable income of a little under $200,00 and paid about $24,000 in taxes for tax year 2023. I estimate that I owe about $45,000 (15%) in taxes due to this long-term capital gain. My wife and I will probably make the same amount from our salaried jobs this year, so taxable income should be very similar to 2023.
I am a little confused about making an estimated payment to the IRS, even after reading through the forum and the IRS website.
"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.) "
For the first question, yes, I expect to owe at least $1,000.
For the second question, I think that would be yes, as well. However, if I make an estimated payment to the IRS this summer that would put me above 110% of 2023's tax return (e.g. roughly $24,000*10%=$2,400) by end of calendar year 2023, would that mean I can pay the remainder of the tax I owe for 2024 in April 2025 without an underpayment or late penalty (e.g. roughly $45,000-$2,400=$42,600)?
As always, I appreciate all the work you all do to help the community here.
Thank you
@dmertz
