You'll need to sign in or create an account to connect with an expert.
Can this 110% tax liability be paid in monthly installments this year.
yes you can. use IRS Direct Pay but note that 25% of 110% your 2021 tax must be paid by 4/18/2022 another 25% by 6/15/22 then 9/15/22 and finally 1/17/2023
with your income so uneven and especially since you probably haven't paid in through withholding and estimated taxes 55% (1/2 of the 110%) of your 2021 tax by 6/15/2022 you may be subject to penalties for underestimation for the 1st two quarters.
when you do your 2022 return you can use the annualized income installment method to figure if you have a penalty.
you can use the 2021 form 2210 pages 3 and 4 to figure what needs to be paid now or by 9/15
https://www.irs.gov/pub/irs-pdf/f2210.pdf
here are the rules to avoid an underpayment penalty.
There will be no federal penalties in 2022 for not paying in enough taxes for the year if withholding
or
or
or
state laws differ
In lieu of estimates you can arrange to have extra withheld from your paycheck anytime until the end of the year.
Thanks!
Pls correct me if I'm wrong, if you can. I know you cant offer specific tax advice.
total tax for year 2021 is 127735
110% of that is 140508.5
So far till july 2022 between wife and me , federal withheld amount is 79523
My wife wont be working rest of year.
So I will have to reach 140508.5 through a combination of my ongoing withholdings and estimated tax payments.
If I reach that, then I can just pay the remainder of estimated taxes on my capital gains when I file taxes in April 2023.
Correct on all counts except the timing of the payments. If you choose to make an estimate you should make the quarterly payment in full in the quarter the stock sale happened since the IRS wants the taxes paid as the income is earned. However, any withholdings done thru the payroll system are considered paid evenly thruout the year even if all the payments are done on the last paycheck of the year. But if your spouse is no longer working AND the sale is considered long term then you may only need to pay 90% of the 2022 income tax if it will be less than 2021 ... so do some estimated payment calculations to decide the amount you need to make in advance to avoid an underpayment penalty.
Of course, you can wait to you file to pay the tax + penalty when you file your return if you want to keep the money until then and keep it "working" for you. The underpayment penalty is currently at 4% so if you can make a better rate of return then go for it.
The following is the general rule:
You must pay estimated tax for 2022 if both of the following apply.
Note: If your AGI for 2021 was more than $150,000 ($75,000 if your filing status for 2022 is married filing a separate return), substitute 110% for 100% in (2b)
Deleted
Thank you all!
Still have questions?
Make a postAsk questions and learn more about your taxes and finances.
taxman33
New Member
StackerP
New Member
acald11
New Member
migloth
Level 1
melissaforpeace315
Level 4
Did the information on this page answer your question?
You have clicked a link to a site outside of the TurboTax Community. By clicking "Continue", you will leave the Community and be taken to that site instead.