Do I need to pay taxes early before April 2018 if I sold a house in 2017 and made a profit on the home?? I only lived in the house for a year and made 45k on it.

 
rjs
Level 15
Level 15

Deductions & credits

If you will owe a significant amount of tax on the profit from selling the home, you should make a payment now to avoid penalties. If you wait until April you will owe a penalty for late payment.

How much tax you will have to pay, or whether you will have to pay any tax at all, depends on your other income and other factors. You can use TaxCaster, at the link below, to estimate your tax. It's still set up for 2016, but the results will be very close for 2017.

Exactly how long you owned (not lived in) the house could make a big difference. If you owned it for a year or less, your profit is short-term gain. If you owned it for more than a year, it's long-term gain, which is taxed at lower rates. If your other income is low enough, some or all of the long-term gain might be taxed at 0%, in other words, not taxed at all.

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Deductions & credits

Did you ever rent it out?

Deductions & credits

Was it your Main Home?  If so, what was the purpose of your move and the sale of your home?

Deductions & credits

First, if this was your personal home where you lived, you might still qualify for a partial exclusion of the gain. Normally you must live in the home for 2 years to use the exclusion, but if you moved due to an "unforeseen circumstance" then you can get a partial exclusion that will mean you owe no tax.  If you lived there 1 year, you can exclude 50% of the usual limit (usual limit is $250,000 per person, so you can exclude up to $125,000 of gain.  Since your gain is less, you would owe no tax at all.)

Qualifying "unforeseen circumstances" include if you have to move due to military orders or foreign service, due to unemployment (you no longer can afford the home), medical issues that prevent you living in that particular home, or the birth of a child (if the home is now too small).  See IRS publication 523 for other examples.  Most people aren't audited but if you are, you will need to be able to prove to the auditor that you had a qualifying unforeseen circumstance.  https://www.irs.gov/forms-pubs/about-publication-523

If you don't have a qualifying unforeseen circumstance, then you owe tax on the gain amount.  If you lived there more than a year (366 days or more) then it is a long term capital gain taxed at 15% for most people.   If you lived there one year or less it is a short term gain and you owe tax at your regular tax rate.

You are supposed to make estimated tax payments when you have a sudden increase in income.  Don't forget your state taxes too.  You can use the taxcaster to estimate the tax that will be owed.  You can make the payments at www.irs.gov/payments.  Be sure to choose "2017 estimated tax" as the reason.  If you pay too much, the extra will be added to your refund.

However, even though you are supposed to make the estimated payments, you won't be charged a penalty if one of these statements is true.

1. You owe less than $1000 when you file your return. 

2. You paid at least 90% of the total tax you will owe, from a combination of withholding and estimated payments.

3. You paid (from a combination of withholding and estimated payments) an amount equal or more than 100% of your tax liability for last year (or 110% of your tax liability for last year if your income was more than $150,000.) 

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