Another rental sale question

[jonpagel]

I got some good feedback on another post but wanted to clarify this

*$500k income with federal withholding from paychecks

*sold rental with a 300k long term gain this month

i know about recapture and the brackets and adjusting basis and all that

i just want to make sure I don’t have to fork over a huge chunk of money before the end of 2022….my current plan is to make sure I have 110% of 2021 taxes withheld and have TurboTax guide me thru the rental sale taxes when I complete 2022 taxes in early 2023….is that right in order to avoid a penalty?  Thanks

[tagteam · Accepted solution]

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@jonpagel wrote:

my current plan is to make sure I have 110% of 2021 taxes withheld..

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Yes. Given the facts you presented, you need to pay 110% of your 2021 income tax liability in order to avoid an underpayment penalty.

[jonpagel]

Ok thanks…and it is literally just 110% of the federal withholding line on my paycheck?  I’m probably making more money this year from my employer so they will withhold more because of that but it is just 110% of 2021 federal withholding regardless if my job income increases this year right?  That should actually help because it there will be more withholding due to that to push me over last year…I’ll Have them withhold some extra as well… Thanks !

[tagteam]

It is 110% of the tax shown on the return for 2021.

Look at Line 24 of your 1040.

[Opus 17]

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@jonpagel wrote:

Ok thanks…and it is literally just 110% of the federal withholding line on my paycheck?  I’m probably making more money this year from my employer so they will withhold more because of that but it is just 110% of 2021 federal withholding regardless if my job income increases this year right?  That should actually help because it there will be more withholding due to that to push me over last year…I’ll Have them withhold some extra as well… Thanks !

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110% of your tax liability.  That's what the IRS got to keep after all was said and done.  For example, if you had $10,000 withheld and you got a $1000 refund, your liability was $9000.  Likewise, if your withholding was $10,000 and you owed an additional $1000, your liability for the year was $11,000. 

[jonpagel]

Got it…I will owe a lot(50-80k) when I file my taxes but that will be ok as long as I withhold 110% of my 2021 tax liability correct?

[jonpagel]

Got it…I will owe a lot(50-80k) when I file my taxes but that will be ok as long as I withhold 110% of my 2021 tax liability correct?

[tagteam]

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@jonpagel wrote:

.....that will be ok as long as I withhold 110% of my 2021 tax liability correct?

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Yes.