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Is there a penalty for not withholding tax on a $90,000 sale of raw land?

In August I received approximately $90,000 for the sale of some raw land.  No tax was withheld.  I have owned the property for many years, so I expect it will be taxed as long term capital gains af 20%, or $18,000.  Is this correct.?  Is there a penalty for payment after year end?
1 Reply
Level 15
Level 15

Is there a penalty for not withholding tax on a $90,000 sale of raw land?

Because you had income with no federal (and state, if applicable) tax withheld, you should make an estimated tax payment as soon as possible.  The payment was received in August, so it was received in the 3rd quarter of 2018.  Technically, you should have sent in estimated taxes on this income for that quarter.  

Because the IRS works on a "pay as you go" system, they would expect payment in a timely fashion.  The sooner you make the payment, the better.  You may still incur an underpayment penalty, but the penalty will be less the sooner payment is made.

The most expedient way to make your payment is by using the "Direct Pay" option, linked below.

The percentage of your income to be submitted for long-term capital gains varies depending on your tax bracket.  If you've determined that your situation requires 20% payment, that should be fine.  Don't forget to also make a state estimated tax payment if it applies to you.   


*** I am NOT a tax expert. I am a seasoned TurboTax user, and volunteer to provide assistance to TT users. Nothing I post is to be considered TAX ADVICE; I bear no legal liability for responses.***
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