I just found out about quarterly taxes. I sold some stock back in January and February for about a profit of $7,000. However, I didn't take this money out of my WeBull account but rather reinvested it in stocks that are pretty much in the negative at the moment.
1) Do you only have to pay estimated taxes if you transfer the money out of the brokerage account and into your bank account?
2) My overall profit for the year is about $3,000. My AGI for tax year 2020 was about $38,500. Should I have reported estimated taxes?
3) Does TurboTax have software to help with this? If so, does it allow you to file quarterly taxes without charging you a fee each quarter?
4) If not TurboTax, what type of professional should I seek help from? What designation should that person have? Enrolled Agent? CPA?
1) Do you only have to pay estimated taxes if you transfer the money out of the brokerage account and into your bank account? All sales are reported on the return no matter what you did with the money from them.
2) My overall profit for the year is about $3,000. My AGI for tax year 2020 was about $38,500. Should I have reported estimated taxes? You only pay taxes on the profits no matter what you did with them and you pay a penalty for not making having enough paid in advance but only if you will owe more than $1000 on the tax return.
3) Does TurboTax have software to help with this? If so, does it allow you to file quarterly taxes without charging you a fee each quarter? Yes, the TT program can help you fill in estimated payment forms but you cannot make the payments thru the TT program.
You should consider paying quarterly estimated taxes if you don't have enough withholding taken out to cover the tax on all your income. You might be able to increase your W2 withholding, at your regular job, to account for the extra income.
To avoid an underpayment penalty, you should make estimated tax payments for the current tax year if both of the following apply:
- 1. You expect to owe at least $1,000 in tax for the current tax year, after subtracting your withholding and credits.
- 2. You expect your withholding and credits to be less than the smaller of: 90% of the tax to be shown on your current year’s tax return, or 100% of the tax shown on your prior year’s tax return. (Your prior year tax return must cover all 12 months.)
TurboTax (TT) can prepare the payment vouchers. In your 2016 software, enter at:
Federal Taxes or Personal
Other Tax Situations
Other Tax Forms
Form W-4 and Estimated Taxes - Click the Start or Update button
If your goal is just to avoid the underpayment penalty, then paying 100% of the prior year tax liability is the “safe haven”
How do I make estimated tax payments?
Can TurboTax calculate next year's federal estimated taxes?
Can TurboTax calculate the estimated payments for next year's state taxes?
You are not required to make estimated quarterly payments. You only need to make an estimated payment if you want to avoid an underpayment penalty. Based on what you described, there will be little or no penalty. My advice: don't bother with estimated payments.
If the stocks you sold were owned for more than 1 year, the "profit" is considered long term capital gains (LTG). Most (probably all) LTG, for someone with $38K AGI, is taxed at 0%.
The TurboTax (TT) software is easily capable of handling stock sales. You don't need a professional. But, you may have to pay for a software upgrade to TT Premier.
If you had a gain of $7,000 you will pay tax on that even if you reinvested the profits and lost them back but are holding on to your losers (which is what some people do, hoping they will come back).