Must I pay estimated tax on capital gains?

[online]

Sold employee stock in December. Total annual income, including capital gains, is less than $150,000. I have always done my own taxes through TurboTax, but need help this year, as taxes get more complicated. I read that if the taxes withheld are at least what I owed last year, then I do not have to pay estimated taxes. Thanks in advance!

[bwa · Accepted solution]

For estimated taxes, it doesn't matter where the income came from.  You'll have to pay an underpayment penalty for 2015 if you owe more than $1,000 in taxes (after withholding) and:

• Your taxes withheld don't cover at least 90% of what you owe for 2015, or
• Your taxes withheld aren't at least 100% of what you owed for your 2014 taxes, if your adjusted gross income (AGI) is up to $150,000, or
• Your withholding is 110% if your AGI is more than $150,000. (The AGI amount is $75,000 if you're married filing separately.)

Even if you owe less than $1,000 (or have a refund coming) you can still owe an estimated tax penalty if the payments were not made ratable throughout year.  For example, if you are going to owe taxes and make a large estimated tax payment late in the year, even one large enough to generate a refund, it will not negate the penalty for underpayments before that date.

[online]

To confirm, this would be the first time ever of paying estimated taxes. Would the est taxes need to be paid by Jan 15?

[bwa]

Yes, the due date is January 15.  As the income occurred in December and if a penalty appears, go back and select the exception for "annualizing income."  It's not fun to compute, but should negate the penalty.

[online]

Hey thanks bwa!
As per my answers to your bullets, it sounds like I can assume there would be no penalty and no estimated taxes are due. But, would I need to purchase additional software? I bought the Deluxe, which may not account for stock sales.
A=Taxes withheld DO cover at least 90% of what is owed for 2015
B=Taxes withheld ARE at least 100% of what owed for 2014 (AGI is <150k
C=n/a
D ... My withheld taxes for 2015 are greater than what was withheld for 2014.

[bwa]

The desktop Deluxe will handle the sale (the on-line version will not.)

[online]

Awesome! Thank you -  Especially the part about annualizing income. Much appreciated! 🙂

[mvk_atl]

Might I suggest this would be most accurate if instead of "taxes withheld" it stated "total of withholding and estimated tax payments"; and that instead of "Your withholding IS 110%" it stated "Your total of withholding and estimated tax is NOT at least 110% of your 2014 tax."  I am struggling with that decision of how much to pay (and whether income from investments will derail me and cause an underpayment penalty). Here is the official IRS statement on avoiding penalty.
<a rel="nofollow" target="_blank" href="http://taxmap.ntis.gov/taxmap/pub17/p17-023.htm">http://taxmap.ntis.gov/taxmap/pub17/p17-023.htm</a>