Estimated Tax Payment and Carryover Loss?

[VAer]

For example(just an example), I have $35k short term stock capital gain in May 2020, and I suppose to pay estimated tax for 2nd quarter 2020. However, I lost over $60k a few years ago, then apply $3k deduction to taxable income each year, and there will be around $40k capital loss carryover for 2020 tax return (when filing in 2021).

In this case, do I need to pay 2nd quarter estimated tax to IRS? Since I still have capital loss.

Do I need to pay 2nd quarter state estimated tax(does capital loss carryover applying to state)?

Assuming I have another $30k stock capital gain in 3rd quarter 2020, then I should pay 3rd quarter estimated tax to IRS on $25k accumulative capital gain? Where 25k=30k-(40k-35k)

Thanks.

[MinhT1 · Accepted solution]

You do not need to pay estimated tax for your capital gain of $35k in the second quarter as they will be offset by your capital loss carryover.

In the 3rd quarter, you should pay estimated tax as your carryover has been used up.

[VAer]

Thanks. How about 2nd quarter estimated tax and 3rd quarter estimated tax for state?

[MinhT1]

The same principle as for Federal applies.

[Carl]

I would suggest that you pay "at last" $1 (one dollar) each quarter. Otherwise, there are situations where the program "will" assess a penalty that requires you to annualized your income to cancel it out.  It's more of a PITA to annualize, than it is to go to www.irs.gov/payments and make a one dollar online payment.

Same would apply to state to if your state taxes your income. But you'd have to check your state website to see what method of payment they accept. Not all states have online payment options.