A hypothetical situation, but it may happen to me in the future..
if I don't have any incomes in the 1st, 2nd and 4th quarter, but had a large capital gain(exceeding 250k/500k) from selling a house in the 3rd quarter, how should I pay the estimated taxes ?
This is a scenario that paying estimated taxes in the Q1 and Q2 has never been crossed my mind because the idea of selling a house suddenly came up in the Q3. So, no estimated taxes were paid in the Q1 and Q2.
Should I pay the whole estimated tax in the Q3, or split it into 2 installments, each of which is paid in the Q3 and Q4, respectively ?
Generally, estimated tax payments are made as the estimated liability is incurred.
There are situations where lookbacks and annualization are used which could have a significant impact on underpayment of tax penalties. Hypothetically speaking I vote Q3 & Q4!!
Well, if this has not happened yet, quarter three ended August 31. Any sale that happened between September 1 and December 31 is technically in quarter four** and the estimated payment would be due January 15.
The option which is least likely to result in penalties and extra paperwork, is to pay all the estimated tax in the quarter in which the lump sum income occurs. If you end up overpaying, you would get the difference back as part of your tax refund.
** estimated taxes are not quite due every three months. For income earned from January through March, the due date is April 15. April and May, due date is June 15. June through August, due date is September 15. September through December, due January 15.