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saranyan
Returning Member

I sold some stock in Nov, and no taxes were withheld. I owe a significant amount to IRS and don't want to pay interests and penalty. Can I pay a one time estimated tax?

 
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4 Replies
dmertz
Level 15

I sold some stock in Nov, and no taxes were withheld. I owe a significant amount to IRS and don't want to pay interests and penalty. Can I pay a one time estimated tax?

DJS
Alumni
Alumni

I sold some stock in Nov, and no taxes were withheld. I owe a significant amount to IRS and don't want to pay interests and penalty. Can I pay a one time estimated tax?

Yes, you can complete and pay the 4th quarter estimated tax. The Q4 payment is due by 15th January, 2020, but can be paid at any time. You can also use the Electronic Federal Tax Payment System (EFTPS) to make the payment (https://www.eftps.gov/eftps/direct/EftpsHome.page). 

Answers are correct to the best of my ability but do not constitute legal or tax advice.
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Anonymous
Not applicable

I sold some stock in Nov, and no taxes were withheld. I owe a significant amount to IRS and don't want to pay interests and penalty. Can I pay a one time estimated tax?

there are safe harbors so you will owe no penalties for underpayment of tax.  this is a short list. there are other exceptions.

 

if you had a tax liability in 2018, 

 

then if you have 2019 withholding that equals 100% of the 2018 tax (110% if single or MFJ if 2018 adjusted gross income over $150,000) no penalties despite how much your 2019 taxable income jumps.  (if you have made other estimated tax payments, they count too.  the difference is w/h is assumed to be prorata throughout the year unless you use actual amounts for each period but estimates are based on date paid)

 

if you don't meet this exception 

TT default method for estimated tax penalties is to assume income and withholding are equal throughout the year and estimated tax payments are based on the date paid.   to avoid the penalty calculation,   you will need to use the annualized income installment method on the form 2210 and need to submit it with return.  

 

 

 

I sold some stock in Nov, and no taxes were withheld. I owe a significant amount to IRS and don't want to pay interests and penalty. Can I pay a one time estimated tax?

I've found that just a small estimated tax payment (i.e. $200 per quarter) can be enough to avoid penalties and interest on a large tax due amount.

This is calculated by my trial tax returns.

If you can't do a trial tax return, then you need to err on the side of caution and send in more moola.

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