For tax year 2019, I received a refund from the IRS and I received a refund from the Alabama Depart met of revenue, so my withholding and other payments have been sufficient to pay my taxes in the past.
I sold a stock in November 2020 that was purchased in March 2020. I made a nice short term gain, and am now concerned about taxes and in particular, I would like to legitimately avoid tax penalties. How do I legitimately avoid tax penalties in this case?
I am already sending in quarterly payments to the IRS via Form 1040-ES, and think that I can address the taxes from the November 2020 tax sale (short term gain) by increasing the amount I pay prior to 1/15/2021. I think I will remain the same tax bracket, so I will multiply the amount of the short term gain by my marginal tax rate to determine the additional amount to be included. Is that the way this should be handled?
For the Alabama Department of revenue, I think that the rate is 5% no matter what else is considered. In that case, I think I need to multiply the amount of the short term gain by 5% and send that in via form 40ES 2020 by 1/15/2020. Is that the way this should be handled?
