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Ihatetaxes-
New Member

Is capital gain tax payable with my federal filing for 2018? Do I have the option to prepay this tax, will I get slapped with a fine if I do not?

I will owe a few thousand dollars in taxes and would like to pay that now so I do not have to worry about maintaining that balance in my account.

6 Replies
HelenC1
Intuit Alumni

Is capital gain tax payable with my federal filing for 2018? Do I have the option to prepay this tax, will I get slapped with a fine if I do not?

The tax system is pay-as-you-go. For 2020 capital gains (income), you need to pay estimated income taxes for federal and state (if applicable) in the 2020 quarter you earned the income to avoid underpayment penalties.

 

You can pay your federal estimated taxes online or by sending a check or money order with Form 1040-ES. See Payments | Internal Revenue Service.

 

To pay your state estimated, visit your state's website try contacting your state Department of Revenue for more information.

 

Related information:

[Edited 3-10-2020|6:37 am PST]

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Kikipantspie
Level 2

Is capital gain tax payable with my federal filing for 2018? Do I have the option to prepay this tax, will I get slapped with a fine if I do not?

Please - Can you advise me? I just (in Feb 2021) received a $10K penalty payment demand (payable next week) from NY State saying that I failed to pay estimated taxes in 2018 on the large capital gains from the sale of my home in mid-July of that year. I had no clue at all that I needed to pay estimated taxes in the same year that I sold, and instead had a tax preparer prep my 2018 taxes and sent huge tax checks to both IRS & NYS on the due-date Apr 15, 2019. Now that I received this demand letter (and have the ability to.protest it), I have researched and it seems(?) that I may NOT in fact owe this penalty because apparently the requirement to pay estimated taxes is based on your PRIOR-year tax liability. In my case, I was not working in 2017 (the year prior to my 2018 home sale), and had no income in 2017, and therefore did not have a tax filing requirement (and therefore I did not file in 2017), and had no 2017 tax liability.  I cant tell if I am understanding the rules & all I'm reading on this topic correctly and if in fact I can fight this giant demand for penalty payment. Can someone please advise me as I dont know if my understanding is correct & that in fact I did not have to pay estimated taxes in 2018 on my home sale, by virtue of the fact that I didn't have a filing requirement or any tax liability in 2017. Kindly advise as I am terrified. Thank you so much in advance.

gloriah5200
Expert Alumni

Is capital gain tax payable with my federal filing for 2018? Do I have the option to prepay this tax, will I get slapped with a fine if I do not?

My questions are:

 

Should you have filed a return for 2017?  One thing you could do is to print out the forms from the NY website and calculate them by hand to be sure you would have no NY tax liability for purposes of requesting NY Dept of Tax to waive the underpayment penalty they have calculated based on 90% of the "current year tax liability" for 2018.

 

By doing this, you are eliminating any possible "footholds" that NY might have for still assessing you the underpayment penalty.
 

As long as you should not have filed a 2017 return (because you did not), and

As long as you should not have had withholding taken out at the closing of the sale of your home and did not, then

 

Your best bet is to request they waive the underpayment penalty.

 

In general, you may owe the penalty for 2018 if you did not pay at least the smaller of:

• 90% (66⅔% for farmers and fishermen) of the amount of tax shown on your 2018 return; or

• 100% of the tax shown on the 2017 return (110% of that amount if you are not a farmer or a fisherman and the New York adjusted gross income (or net earnings from self-employment allocated to the Metropolitan Commuter Transportation District (MCTD)) shown on that return is more than $150,000 ($75,000 if married filing separately for 2018)). You must have filed a return for 2017 and it must have been for a full 12-month year; or

• 90% of the tax computed by annualizing the taxable income received for the months ending before the due date of the installment. Use Part 1 to see if you prepaid enough of your required annual tax payment. If you did not, use Part 2 or Part 3 to compute the penalty. If you checked filing status  on your New York State return, each spouse must compute the penalty on separate Form(s) IT‑2105.9.

 

 Another option you have is to do this:

If you are requesting a waiver of the penalty, submit a statement with Form IT-2105.9 containing all the facts necessary to justify your request.

 

-You didn't have a 2017 tax liability and were below the filing requirements (if you were) for 2017

-therefore, with a 2017 $0 tax liability, the withholding you had taken out met the exception  requirements to waive the 2018 underpayment penalty.

-Request to please waive the underpayment penalty assessment due to the qualified exceptions

 

Exceptions to the penalty are at the following link:

IT2105.9 Instructions for 2018 NY underpayment penalty

Kikipantspie
Level 2

Is capital gain tax payable with my federal filing for 2018? Do I have the option to prepay this tax, will I get slapped with a fine if I do not?

Thank.you so much for your feedback. I also wondered if I should try to put together a 2017 tax return now (even though I am positive I didn't have a filing requirement for that year.) But I am nervous to do that because I may not have whatever small bank interest 1099s/etc may have been sent to me for that year, so I don't want to accidentally enter erroneous #s onto a 2017 tax form now and get myself into different trouble with them. I would want to be completely accurate with the #s I enter and couldn't do that for 2017 with any surety. The only thing I know for sure is that I didn't have income (beyond perhaps a tiny nominal amount of bank account interest, ie $16 or something) that would have required me to file in 2017. I feel so overwhelmed and confused. Any further feedback and wisdom would be incredibly appreciated.

MaryM428
Level 10

Is capital gain tax payable with my federal filing for 2018? Do I have the option to prepay this tax, will I get slapped with a fine if I do not?

Regardless of your gross income, you are generally required to file an income tax return if any of the following are true:

 

  1. You had net self-employment income of $400 or more.
  2. You had unemployment income.
  3. You owed Alternative Minimum Tax


Since none of those apply to you, you do not need to file a 2017 return.

Kikipantspie
Level 2

Is capital gain tax payable with my federal filing for 2018? Do I have the option to prepay this tax, will I get slapped with a fine if I do not?

None of those applied to me. Thank you.

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