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chrisfields08
New Member

Selling home june 2018 will have $700,000 in LT capital gain. Alimony income is $50,000. How much will I owe on this large gain as a single filer?

My alimony income is around $50,000.  Have been making quarterly estimated tax payment.  I am selling my house of 20 years this june 2018 and will have over $700,000 in LT capital gain.

How do i estimate my quarterly tax payment for 2018 so not to be liable for under payment penalty in 2018 when the sale of my home won't happen until summer 2018?  And how much tax will I owe?

1 Best answer

Accepted Solutions
Zbucklyo
Level 9

Selling home june 2018 will have $700,000 in LT capital gain. Alimony income is $50,000. How much will I owe on this large gain as a single filer?

It is a bit difficult to tell, especially since the proposed tax bill for 2018 has yet to be passed, but you are looking at roughly $80,000 to $90,000 in federal income tax, assuming you are filing single and taking the standard deduction.  Under 2017 tax law, you would owe about $95,000, but I would expect this amount to go down:

(1) Your non-capital gain income tax (alimony) should be somewhat less - increased standard deduction, and you will not lose your personal exemption as you would under current law.

(2) Your capital gains tax should be about the same, since the brackets and tax rates are unchanged as of right now.

(3) You would owe Alternative Minimum Tax in 2017 of about $6300.  That will either be zero or greatly reduced in 2018.

(4) You will owe Net Investment Income Tax of about $11,400, assuming the new law does not change the calculation of this - and I haven't seen anything that indicates a change

To avoid an underpayment penalty, just make an estimated tax payment equal to 110% of your 2017 tax liability (it should be 100%, but go to 110% just to make sure).

View solution in original post

6 Replies
Zbucklyo
Level 9

Selling home june 2018 will have $700,000 in LT capital gain. Alimony income is $50,000. How much will I owe on this large gain as a single filer?

It is a bit difficult to tell, especially since the proposed tax bill for 2018 has yet to be passed, but you are looking at roughly $80,000 to $90,000 in federal income tax, assuming you are filing single and taking the standard deduction.  Under 2017 tax law, you would owe about $95,000, but I would expect this amount to go down:

(1) Your non-capital gain income tax (alimony) should be somewhat less - increased standard deduction, and you will not lose your personal exemption as you would under current law.

(2) Your capital gains tax should be about the same, since the brackets and tax rates are unchanged as of right now.

(3) You would owe Alternative Minimum Tax in 2017 of about $6300.  That will either be zero or greatly reduced in 2018.

(4) You will owe Net Investment Income Tax of about $11,400, assuming the new law does not change the calculation of this - and I haven't seen anything that indicates a change

To avoid an underpayment penalty, just make an estimated tax payment equal to 110% of your 2017 tax liability (it should be 100%, but go to 110% just to make sure).

View solution in original post

SweetieJean
Level 15

Selling home june 2018 will have $700,000 in LT capital gain. Alimony income is $50,000. How much will I owe on this large gain as a single filer?

Under the pending bill, isn't alimony no longer taxable?
Hal_Al
Level 15

Selling home june 2018 will have $700,000 in LT capital gain. Alimony income is $50,000. How much will I owe on this large gain as a single filer?

Yes & no. Newly divorced (after 2018) would no longer be taxable (or deductible) but existing alimony arrangements would still be subject to the old rules <a rel="nofollow" target="_blank" href="http://money.cnn.com/2017/12/15/pf/taxes/alimony-tax-bill/index.html">http://money.cnn.com/2017/12/1...>
fanfare
Level 15

Selling home june 2018 will have $700,000 in LT capital gain. Alimony income is $50,000. How much will I owe on this large gain as a single filer?

you're not required or expected to make estimated tax payments ahead of time on an anticipated future capital gain.
On the other hand if you're planning to move to another home costing $700,000 you may have a cash flow issue with the IRS in 2019.
chrisfields08
New Member

Selling home june 2018 will have $700,000 in LT capital gain. Alimony income is $50,000. How much will I owe on this large gain as a single filer?

To Zbucklyo:  Thank you so much.  Your response was so helpful and exactly what I need to re-confirm my thoughts about 2018 estimated tax payments.
chrisfields08
New Member

Selling home june 2018 will have $700,000 in LT capital gain. Alimony income is $50,000. How much will I owe on this large gain as a single filer?

To fanfare:  Can you explain further?  What kind of cash flow issue with the IRS in 2019? And why the price of the new home would matter whether it's a $700,000 house or a $400,000 house?
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