We sold a large quantity of stock in a mutual fund account in December because the price started to drop. We re-invested all of the funds into an annuity account. We're both retired and live on Social Security and RMDs. Turbo Tax has calculated the amount upon which we owe tax and it throws us into a tax category that's about 4 times our usual income, plus wants to apply a penalty. Is there anything we can do to avoid this? Also, since this occurred in the last month of the year, don't we have until 3/31/21 to pay any estimated tax on the funds so that we don't have to pay a penalty? And does this mean we have to repay the stimulus checks we received since it shows that we have a much larger income for the year than we did when the checks were issued and now don't qualify? I thought that since we had paid capital gains taxes on these funds for years that we wouldn't have to pay income tax again. So much for what I think ... I'd appreciate any help anyone can give. Thanks!
