I moved from CA to NV in the spring of 2023, selling my house in CA while there and buying a house outright in NV. The house sale caused around $160K in capital gains (above the $250K exclusion and after capital improvements were factored in). As an aside, I had no income outside of interest and dividends as I retired in the fall of 2022 but I have two pensions starting or backpaying to early January 2024. I have been living on my inheritance from a distribution from my deceased father's "estate" (a trust) and previously saved money during 2023.
I had already run calculations on my taxes, so I knew what to set aside for paying Fed and CA taxes and was close to the final figures that TurboTax had figured. This was roughly $16K in taxes for Fed and $9K in taxes for CA
TurboTax showed that I had no underpayment penalty but it did produce estimated tax payments for both CA and Fed. Since I moved from CA and that date was input into the TurboTax program as a part-time resident, I will no longer be paying CA taxes so any estimated taxes for CA are irrelevant. However, my question is regarding Fed estimated taxes and whether I need to pay them. These estimated taxes are about $4K per quarter. I had one member of my extended family tell me that I have no choice but to make those payments. I, however, do not see the need to make any of those payments from what I understand so far. As my two pensions start up (backpaying to this January), my goal is to have more than enough in Federal withholdings in these to make sure that under no circumstance will I owe $1000 or more in Fed taxes for the 2024 tax year. I can run various tax calculators on my income from these two pensions, plus account for projected taxable interest and dividends. Then, I can periodically adjust withholdings as needed and perhaps overcompensate briefly if needed if there is any "catching up" to do. For investments that have no interest or dividends, if I were to withdraw money from those and make a capital gain I could always have a suitable withholding made from the proceeds.
Is this a good strategy? I am not opposed to quarterly payments when needed, but I am trying to move past this "windfall" effect on my taxes. I usually try to adjust my withholdings to be in the range of owing $250 to getting a refund for $250 in any given year. For the 2024 tax year, I am willing to be more careful and push that into a $1000 refund estimate area, just to be safe.
Thanks for any advice out there.
