My long-term capital gain is about $400K and my household income is below $120K. I am expecting that my withholding taxes for 2018 is more than my 2017's tax payment. What I heard is that I don't need to pay estimated tax for my capital gain now and I can delay the payment until next year's tax return if my withholding tax amount for 2018 is more than the tax that I paid in 2017. But I also heard that I need to pay estimated tax if my capital gain is significant (even more than my annual salary). Which is true? I don't want to pay underpayment penalty so I want to get advice here. Thanks in advance!
Yes, if you expect your 2018 federal withholding will be more than your tax liability for 2017, you will not incur the penalty for paying insufficient estimated tax for 2018.
Therefore, you can wait until the filing of your 2018 return to pay the tax on your expected capital gain.
Please read this IRS document for more information:
https://www.irs.gov/taxtopics/tc306
Yes, if you expect your 2018 federal withholding will be more than your tax liability for 2017, you will not incur the penalty for paying insufficient estimated tax for 2018.
Therefore, you can wait until the filing of your 2018 return to pay the tax on your expected capital gain.
Please read this IRS document for more information:
https://www.irs.gov/taxtopics/tc306