Defer relatively large stock gains

[catdelta]

Hi there,

I have some long term stock positions but plan to sell them to preserve value given the current situation.

While the taxable gains could be large, am I right that so long as I make sure the federal withholding from salaries is over 110% of my 2024 federal tax, I do not need to make any quarterly payment during 2025?  So I can pay with my 2025 filing in 2026, to earn myself more interest.

For my state (NJ), seems that I must make the quarterly estimated payment.

Thank you very much.

[MaryK4]

Yes, if your W2 withholdings equal 110% of your 2024 federal tax liability, you will not incur the penalty.  Note that the withholding have to be made throughout the year, so wage withholding works well.  

New Jersey does require payment of estimated taxes based on the current year income so the quarterly estimates will prevent the penalty.

[catdelta]

Thank you very much, Mary.

For the prepayment, am I required to make the payment related to the realized gain over the underlying transaction before the coming quarterly due date (either federal or state)?

For example, I sold stock today with realized profit and I must make the estimated payment before Jun 16?  If I sell more in August, then pay before Sept 15?  I cannot make a large estimated payment at the year-end, right?

Thanks again!

[DianeW777]

Yes, you are correct the payment period cover the previous month(s) activity.

• Jan - Mar - due Apr 15th
• Apr- May - due Jun 15th
• Jun- Aug -  due Sep 15th
• Sep-Dec -  due Jan 15th

@catdelta