When are taxes on capital gains due the IRS?

[chesterspal]

Hello and thanks for the help.

If I sell a stock or fund early next year and there is a cpital gain on that sale, when am I required (so as not to incure any penalty)  to send the approximate taxes due to the IRS?

Tank you!

[Critter-3 · Accepted solution]

You must make quarterly estimated tax payments for the current tax year if both of the following apply:

- 1. You expect to owe at least $1,000 in tax for the current tax year, after subtracting your withholding and credits.

- 2. You expect your withholding and credits to be less than the smaller of:

    90% of the tax to be shown on your current year’s tax return, or

  100% of the tax shown on your prior year’s tax return. (Your prior year tax return must cover all 12 months).

Estimates are due in the quarter the estimated tax is calculated however you can wait and pay on the return if you wish however an underpayment penalty may be imposed.  

[chesterspal]

I see.

So... best to send in something close and let it get settled by the IRS after tax season. 

Thanks much!

[Mike9241]

@chesterspal  generally your taxes for a year must be paid in quarterly. 1/4 for each tax quarter. the due dates for the estimated tax payments are around 4/15, 6/15/ 9/15 and 1/15 of the following year. and withholding ifor the year is deemed paid equally each tax period but when filing you can elect to use the actual amount.

generally, the taxes that must be paid in on a timely basis to avoid penalties are either 90% of the current year taxes or 100% of the prior year taxes (110% if the prior year adjusted gross income was over $150K))

since most taxpayers don't know what their taxes will be for the current year they fall back on the prior year exception.  state laws vary

[chesterspal]

Ok, so I can use what I paid in the prior year and just pay that.

However, if it turns out I did end up with higher taxes due from, say the sale of stock or dividends, does this still protect me from any penalty for paying less than what was required?

 Thanks

[Mike9241]

the prior year tax exception is 100% of the tax unless AGI over 150K then its 110%. however for this safe harbor to work 1/4 of the prior year's taxes must be paid in through withholding and/or estimated tax payment for each tax period. they are 4/18/2022, 6/15/2022, 9/15/2022 and 1/17/2023/

another possibility is 90% of 2022 tax,  same due dates. only 22.5%, of the total 2022 taxes needs to be paid in each period so you end up with 90% paid in

another possibility is the annualized installment method. but that can become complicated because yo must, on your own compute the tax due for each period taking into account all 2022 tax laws regarding tax rates.