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I know I will pay capital gain for selling ESPP/RSU stock, but do I need to pay additional estimate tax during the year? Do I get penalty if I did not fill it?

I sold a big chunk of stock for downpayment, I was told that I should pay estimate tax to avoid penalty. My understanding is that my RSU/ESPP all got taxed one time already when I first got them, (of course, capital gain are not yet taxed.) I am wondering If its needed to submit estimate tax after I sold my stock, or I can wait until annual tax filling period?
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I know I will pay capital gain for selling ESPP/RSU stock, but do I need to pay additional estimate tax during the year? Do I get penalty if I did not fill it?

"My understanding is that my RSU/ESPP all got taxed one time already when I first got them..."

 

Your understanding is correct as far as RSUs go.  When you received the "gross" amount of shares in the RSU grant that was all reported as compensation income and included in your W-2.  However, if the company's ESPP was a "Qualified" ESPP then the discount accorded to you when you bought the shares was not included in your W-2 and was not taxed.  With shares acquired via a Qualified ESPP compensation income (if any) is determined when the stock is sold and this compensation is added to your "out of pocket" cost for basis purposes.

 

As far as your "[do I need] to submit estimate tax after I sold my stock, or I can wait until annual tax filling period" question goes, nobody here can give you a definitive answer; it's just one of those "it depends" situations.

 

Understand that it's perfectly OK to owe the government a lot of money when your tax return is due. What you really want to do is to avoid being "underpaid" (a piece of tax jargon that has a specific legal meaning) and incurring "underpayment" penalties.

 

Most taxpayers will avoid being underpaid if they:

   1) owe less than $1,000 in tax in 2020 after subtracting their taxes WITHHELD and available tax credits,

   OR

  2)if they paid at least the lesser of
       a)90% of the tax for the current year, or
       b)100% of the tax shown on the return for 2019.  (If last year's return shows AGI over $150K (for

           married filing jointly) then change that "100%" figure to "110%.)

 

That second "safe harbor" is the easiest one to figure out since the number is right there on your 2019 income tax return.  (Line 16 for most people.)  So if you're working and you have taxes withheld that meet or exceed the 2019 tax liability, then you can wait until you file your income tax return to pay any tax due.

 

 

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