For example, I perform tax-loss harvesting in current year, realizing a net capital losses of $50,000. The carryover amount should be $47,000 i.e., $50,000 - $3,000 (capital losses deduction from ordinary income).
I expect some income / capital gains during Q1 next year, but it will be less than $47,000 carryover amount. Do I need to pay any quarterly estimated payments?
@crimson91 assuming no other income and no other trading, if you have a capital gain in the first quarter that is less than $47,000, no tax would be due, either as an estimate or on the 2023 tax return.
capital losses at most can offset $3K of ordinary income. if you have taxable income then you likely have an income tax bill for 2022.
the rules for paying estimated taxes for 2023
There will be no federal penalties for not paying in enough taxes during the year if withholding
1) and timely estimated tax payments equal or exceed 90% of your 2023 tax or
2) and timely estimated tax payments equal or exceed 100% of your 2022 tax (110% if your 2022 adjusted gross income was more than $150K) or
3) the balance due after subtracting taxes withheld from 90% of your 2023 tax is less than $1,000 or
4) your total taxes are less than $1,000
the lower of 1 or 2 is your required annual payment. (no payment are required if 3 or 4 applies). under the simplified method for estimated tax penalties, 25% of this amount must be paid in by 4/18, 50% by 6/15, 75% by 9/15 and 100% by year-end.
failing this and being subject to penalties you can use the annualized installment income method.
this method requires knowing your income and deductions thru 3/31, then 5/31, then 8/31, and finally tear end which should be the same as the tax return. the income is annualized. taxes are computed on the annualized income and then de- annualized. your tax payments for each period must equal or exceed these amounts to avoid penalties
form 2210 page 3
https://www.irs.gov/pub/irs-pdf/f2210.pdf
if you have a state income tax its laws can vary.
@crimson91 assuming no other income and no other trading, if you have a capital gain in the first quarter that is less than $47,000, no tax would be due, either as an estimate or on the 2023 tax return.