I sold the rental property in May 2018. Do I need to pay taxes on gain 2018 or I can wait till I file return in 2019? Also how do I estimate taxes on property sale?

[Carl]

Yes, if you sold at a gain you will pay taxes on that gain, unless that rental property was your primary residence for at least 2 of the last 5 years you owned it, and the gain is less than $250K if filing single, or less than $500K if filing MFJ. When you report the sale in the SCH E section of the program, it will take care of all that math for you.
Now knowing that the gain will increase your AGI and can potentially put you in a higher tax bracket for the tax year, if you reasonably believe that gain will increase your tax liability by more than $1000 or more than 10% of your tax liability if you hadn't sold it, then you should go ahead and pay an estimate now. If you send the IRS at least 20% of what you estimate your gain to be, then come tax filing time you'll be fine. You can pay the IRS now, online at http://www.irs.gov/directpay. If your state taxes personal income then you'll need to pay state estimated taxes to your state separately. How you do that, depends on the state, as not all states offer an online payment option.

[bjain]

Since it's been already 4 months. Do I need to pay penalty if I pay now?

[Carl]

No. If a penalty is assessed, the program will take care of it. But understand there's always the possibility no penalty will be assessed. In fact, if you do pay an estimate now, I doubt one will be assessed at all, so long as what you may owe the IRS at tax filing time (assuming you will owe and not be getting a refund) is less than $1000 or less than 10% of your total tax liability.... whichever is *higher*.
In fact, if you knowingly overpay then no penalty will be assessed and you'll get a refund if withholding on your W-2 income has been sufficient.

[bjain]

Thanks. How do I estimate taxes for 2018. I couldn't find any link my turbo tax home.

[Carl]

<a rel="nofollow" target="_blank" href="https://turbotax.intuit.com/tax-tools/calculators/taxcaster/">https://turbotax.intuit.com/tax-tools/...>

[N4Nguyen]

 I have a similar situation.  I live in California and sold an investment property in Florida for a gain in Jun-2022.  Can I wait until the end of the year (Dec-2022) to pay the IRS taxes on the gain without incurring a penalty?  Assuming that at the time of FY2022 tax filing in Apr-2023, I owe the IRS less than $1K or 10% of my total tax liability? 

Also, will I owe California state taxes if the sale of the property is in Florida where there's no state taxes? 

Thanks!

[Critter-3]

Can I wait until the end of the year (Dec-2022) to pay the IRS taxes on the gain without incurring a penalty?  Assuming that at the time of FY2022 tax filing in Apr-2023, I owe the IRS less than $1K or 10% of my total tax liability?   Yes you can if you quailify for the safe harbor rule on paying estimated taxes.

Also, will I owe California state taxes if the sale of the property is in Florida where there's no state taxes? Since you are a CA resident they tax ALL of your income no matter where it comes from.  The fact that the sale was in FL and they don't have a state income tax is just a fringe benefit. 

[Summer23]

Thank you for your reply.  What is  the safe harbor rule on paying estimated taxes?

[Critter-3]

To avoid an under payment penalty  you must make quarterly estimated tax payments for the current tax year (or next 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.)

[N4Nguyen]

Thanks for your reply.  In our situation, the tax on gain is above $1K and the 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.)

So seems like we'll be required to make estimated tax payments.  The house was sold on Jun 7th, 2022.  Does this mean we were required to make the estimated payment in Jun-2022 or Q2-2022?  We did not make any estimated payment.  If we pay now in Sep-2022, does that mean we will incur penalty when we file our FY2022 taxes in Apr-2023?  Or as long as we make the estimated tax payment in 2022, there's no penalty?  Thank you!

[N4Nguyen]

@Critter-3 Wondering if you could help comment on this:

In our situation, the tax on gain is above $1K and the 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.)

So seems like we'll be required to make estimated tax payments.  The house was sold on Jun 7th, 2022.  Does this mean we were required to make the estimated payment in Jun-2022 / Q2-2022?  We did not make any estimated payment.  If we pay now in Sep-2022, does that mean we will incur penalty when we file our FY2022 taxes in Apr-2023?  Or as long as we make the estimated tax payment in 2022, there's no penalty?  Thank you!

[Critter-3]

A sale in June would mean an estimate in Sept. 

Quarterlies are not exactly quarterly ... https://www.irs.gov/pub/irs-pdf/f1040es.pdf

Q1 1/1 thru 3/31  paid on 4/15

Q2 4/1 thru 5/31  paid on 6/15

Q3  6/1 thru 8/31 paid on 9/15***

Q4 9/1 thru 12/31 paid on 1/15 of the next year

[N4Nguyen]

Thanks @cri  What about California State taxes?  Do I need to make the estimated tax payments by 9/15/2022 to the California Franchise Tax Board as well?  

[Critter-3]

California is an odd ball ... they want 30% on the first payment, 40% on the second, nothing on the third and 30% on the forth next January ... so you can wait until the Jan payment with them.