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Returning Member

Avoiding Underpayment Penalty after Sale of Home

I sold my home in February 2022 for a significant  amount over the $500,000 exclusion.  Is it still enough to make sure that I pay in 100% of my 2021 Tax Liability to avoid paying any underpayment penalty?  I will pay the tax due on the sale of my home in April 2023 - is that okay?

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Employee Tax Expert

Avoiding Underpayment Penalty after Sale of Home

Nice investment! According to the IRS, you can still avoid any underpayment penalty by paying in 100% of your prior year liability: Underpayment of Estimated Tax by Individuals Penalty As long as you pay the balance due by April 15 of 2023, there should be no additional penalty. You may want to check the state regulations regarding state penalties based on your state of residency. 

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