I am making money as a day trader, so I will have short term capital gains, do I need to make estimated taxes on a quarterly basis?

[Anonymous_ · Accepted solution]

The key is to avoid a penalty for underpayment of estimated tax.

You can avoid that penalty if:

1) You owe less than $1,000 in tax, after subtracting any withholding and refundable credits, OR

2) You paid withholding and estimated tax of at least 90% of the tax for the current year or 100% of the tax shown on your return for the prior year, whichever is smaller. 

See https://www.irs.gov/taxtopics/tc306

[Critter-3]

If you don't pay the estimates and your withholding isn't any of the following you will be hit with underpayment penalties.

1) 2020 balance due after withholding is less than $1000

2) withholding covers 90% of 2020 tax

3) withholding is 100% (110% if 2019 adjusted gross income is over $150,000) of 2019 tax

See this for calculating 2020 estimated taxes - https://ttlc.intuit.com/community/tax-payments/help/can-turbotax-calculate-next-year-s-federal-estim...

See this for paying estimated taxes - https://ttlc.intuit.com/community/tax-payments/help/how-do-i-make-estimated-tax-payments/00/25875