Thank you so much for clarifying and providing guidance. I feel so overwhelmed because the penalty demand bill they sent me is for $10,000 because the capital gain was so extremely large on the sale of.my home! And the crazy thing is that I literally left all the cash proceeds just sitting in my Bank account from the time of the closing on the sale of the home,, and left it there untouched so it would be ready for paying whatever the taxes calculated to in April 2019. I would have paid them in 2018 had I known that estimated payments were required on a home sale.. I had no clue.. And I already went back to the tax preparer a couple of days ago when I got this demand for payment and asked him why he never raised this with me, and why he didn't review this potential penalty issue with me back in April 2019 (when Im guessing the penalty would have been much lower..instead of 2 years later now...), and he had no answer at all. He just argued and took no.responsibility for any potential errors & instead used the happenstance of my 2017 $0 tax liability (which he didn't know about when he prepared my 2018 return and only learned about now due to this NYS letter), as my "out" for ever having been responsible to.pay 2018 estimated taxes. He says that if you look at the instructions regarding the penalty, my calculation for penalty is $0 because instructions state to use lower of 2017 liability or 90% of 2018 liability...So he says I had no responsibility to pay the estimated taxes to begin with. (So...I dont know what is right, I don't know how to defend myself and I'm also terrified because I also didn't pay estimated taxes to the IRS for the cap gains on my home sale because I didn't know that was necessary...I just paid the full calculated amt in April 2019. Am I going to eventually get hit also with a monster penalty bill from the IRS for the same issue? Again..in reading their instructions re penalties, it seems to say that my $0 2017 tax liability rules & no penalty would apply...But I have no clue if I'm interpreting it wrong & am terrified about that potential bill showing up too.) And yes..to confirm your hunch...I have never ever had any late payment or issues or underpayment ever with any tax authority in my life. I am the most responsible, by the book person alive. I just simply had no.clue at all about paying estimated taxes on a home sale. Any further wisdom, research or feedback on all these specific tax instructions/rules that you think would help me in this insane situation would continue to be appreciated. Your feedback so far has been very helpful.
