Can I began paying estimated quarterly taxes in the 3rd quarter if I have income for the whole year? I'm not required but would like to.

[lakjo]

I have a gig job that I work on the weekends and I would like to start paying estimated quarterly taxes to avoid one big hit on my annual taxes.  I haven't been doing quarterly taxes up until this point and I'm not sure if I can just start with the third quarter of this year.  From what I understand, the quarterly taxes aren't a requirment for me since they would be less than my annual refund.

[DoninGA]

If you wish to pay 2021 estimated taxes there is nothing that says you cannot.  

Go to this IRS payment website and use Direct Pay - https://www.irs.gov/payments

[Mike9241]

not quite correct.  you have self-employed income. on that income you pay not only income taxes but as much as about 14% in self-employment taxes. this is not a problem as llong as enough taxes are paid in duing the year

here are the rules to avoid penalties for not paying in enough during the year

There will be no federal penalties for not paying in enough taxes during the year if withholding
1) and timely estimated tax payments equal or exceed 90% of your 2021 tax
or
2) and timely estimated tax payments equal or exceed 100% of your 2020 tax (110% if your 2020 adjusted gross income was more than $150K)
or
3) the balance due after subtracting taxes withheld from 90% of your 2021 tax is less than $1,000
or
4) your total taxes are less than $1,000

state laws differ

[Jquez]

This is all over my head. I just found out about quarterly taxes. I sold some stock back in January and February for about a profit over $1,000. 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 was about $38,500. Should I have reported estimated taxes?

3) Does TurboTax have software to help with this?

[VolvoGirl]

Estimates are optional, but.....

You must make quarterly 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 0

  100% of the tax shown on your prior year’s tax return. (Your prior year tax return must cover all 12 months.)

To prepare estimates for next year you start with your current return, but be careful not to change anything.  If you can't get back into your return, Click on Add a State to let you back into your retun.

You can just type W4 in the search box at the top of your return , click on Find. Then Click on Jump To and it will take you to the estimated tax payments section. Say no to changing your W-4 and the next screen will start the estimated taxes section.

Or Go to….

Federal Taxes or Personal (Deskop H&B)

Other Tax Situations

Other Tax Forms

Form W-4 and Estimated Taxes - Click the Start or Update button

To just estimate the remaining quarters put in that you paid $1 for the missed quarters so it will only calculate the remaining quarters.

See,

https://ttlc.intuit.com/community/tax-payments/help/can-turbotax-calculate-next-year-s-federal-estim...

Here are the blank Estimates and instructions…..

http://www.irs.gov/pub/irs-pdf/f1040es.pdf

The 1040ES quarterly estimates are due April 15,  June 15, Sept 15 and Jan 18, 2022.  Your state will also have their own estimate forms.

Or you can pay directly on the IRS website https://www.irs.gov/payments

Be sure to pick the right kind of payment and year.....2021 Estimate

[VolvoGirl]

Oh and it doesn't matter what you did with the sale proceeds like leave it in the account.  You report the sales and pay tax on the profit.

  If you had sales in a IRA, ROTH IRA, 401K or retirement account that works differently.  You don't report sales in those accounts, just distributions or rollovers.

[Jquez]

Thank you for responding. I have to be completely honest, reading what you posted is like trying to read coding or engineering documents. I have very little understanding of what those instructions mean. Since I left the proceeds in the account, or actually reinvested them in stocks which are now negative, I presume this all gets figured out with the losses when I upload my brokerage documents for the end of the year taxes? I would assume the losses reduce my tax liability since the profits would come down. Somewhere in the 1040 it asks if you made any estimated tax payments, correct? Is that where you put the quarterly payments information? Would an Enrolled Agent be the best person to speak with about this?

[VolvoGirl]

Yes Turbo Tax will ask for all that.   If you make any estimated payments you will need to manually enter them.  There is a separate spot to enter them.   Did you have actual sales that resulted in a loss?  You only report sales,  not just if your account shows a loss.  It has to be realized gains or losses.  Not just a change in account value.   

You enter (or import) the 1099 B for sales.   If you have a net loss for the year you can deduct 3,000 (1,500 MFS) max on your tax return.  The rest you have to carryover to next year.  You have to report the carryover every year until it's used up.  You can't skip a year.  

See IRS publication 550

https://www.irs.gov/pub/irs-pdf/p550.pdf 

[Jquez]

I sold some stock for a loss and then reinvested those funds during the year. I have probably close to 1000 trades in the year, sometimes day trades. Do I need to put each and every trade in manually? Which version of TurboTax do I use? I get the 1099B at the end of the year and just import it. What is a realized gain? What is MFS? Not familiar with carrying over losses or profits.

[VolvoGirl]

Yikes,  yes you need to report each sale.   There are ways to report a lot of sales.  I'm not sure how that all works or if you need to declare being a day trader.  Someone else will have to help on that.

A realized gain or loss is one you got from selling the shares.  Unrealized would be just the market value change in the account.  You haven't sold and taken the gain or loss out.

MFS means Married filing Separate.  It's your filing status.  If you are married you either file a Joint return or separate returns.

[Jquez]

I have been keeping a excel sheet of my orders. Now and then I come across something that I forgot to put on but then do so once I realize it. So I at least have that. You said this," You haven't sold and taken the gain or loss out." What are you referring to here? I have sold for profits and losses but haven't taken anything out of the brokerage account. Do you know which tax professional would be best to see about this? I read that Enrolled Agents are IRS certified, so maybe them? Thank you for all your help with this. 

[VolvoGirl]

I was referring to what an unrealized gain would be.  

Realized would mean you made a sale 

Unrealized would be just the gains you haven't taken yet (you haven't t sold it yet)

[Jquez]

Thank you so much. I see you have responded to me on two posts.