I had $7.5K due in '21--I had $32K in Capital Gains. TT figures $3,063/quarter in Estimated Tax. With no Cap Gains next year, won't I be penalized for paying too much?

[lanceking52]

All other earnings and deductions will remain relatively static for '22.  I just don't want to yo-yo between over and under payment penalties for a one-time Cap Gains blip.

[SteamTrain · Accepted solution]

No, they don't penalize at all for overpayments. You just end up with a larger than usual refund.

IF you don't think you will have such large Cap gains next year....go ahead and cut down your estimated tax payments accordingly. 

But, I just suggest you pay something each quarter (1k?  2k? ) as one can't tell what the year will bring.  Yeah, it can be a wild guess , especially if you own Mutual Funds.  In my own case, I received unexpectedly large Mutual Fund cap gains last Dec...yep, I owed more than usual.  It just happens.

[leeloo]

The IRS understands that things change from year to year. An overpayment is no problem. An underpayment could be.

[Critter-3]

The following is the general rule:

You must pay estimated tax for 2022 if both of the following apply.

1. You expect to owe at least $1,000 in tax for 2022 after subtracting your withholding and tax credits.
2. You expect your withholding and tax credits to be less than the smaller of: 
   1. 90% of the tax to be shown on your 2022 tax return, or
   2. 100% of the tax shown on your 2021 tax return. Your 2021 tax return must cover all 12 months.

Note: If your AGI for 2021 was more than $150,000 ($75,000 if your filing status for 2022 is married filing a separate return), substitute 110% for 100% in (2b)

Can TurboTax calculate next year's federal estimated taxes?

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