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Capital Gains Tax

I started trading stocks in 2021 and it looks like I am going to report a short term capital gain for the year. When I complete my 2021 tax return and determine that I owe taxes based on the capital gain, will I be subject to a penalty? Thanks

 

PS: I have received a refund every year I've filed tax returns. 

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Accepted Solutions

Capital Gains Tax

the rules for avoiding the penalty for paying in too little during the year.

 

there will be no penalty if withholding and timely estimated tax payments 

1) equal or exceed 90% of 2021 tax

or 

2) equal or exceed 100% (110% if your 2020 adjusted gross income was more than $150K) of your 2020 tax

or

3) the balance due after subtracting withholding (but not estimated tax payments) from 90% of your 2021 tax is less than $1,000 

or

4) 2021 tax is less than $1,000

 

 

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4 Replies

Capital Gains Tax

You will owe a penalty only if you owe more than $1,000 in tax and if your tax liability is greater than in 2020..

Capital Gains Tax

Thank you. Sounds fair. I increased the income tax withholding amount on my monthly retirement monthly check to offset the projected capital gain. 

Capital Gains Tax

the rules for avoiding the penalty for paying in too little during the year.

 

there will be no penalty if withholding and timely estimated tax payments 

1) equal or exceed 90% of 2021 tax

or 

2) equal or exceed 100% (110% if your 2020 adjusted gross income was more than $150K) of your 2020 tax

or

3) the balance due after subtracting withholding (but not estimated tax payments) from 90% of your 2021 tax is less than $1,000 

or

4) 2021 tax is less than $1,000

 

 

Capital Gains Tax

Thank you very much.

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