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Fldavem1
Level 2

Sold my rental - should I pay estimated payment to avoid fee

I sold a rental and I think the tax hit will be $25K for the depreciation ($100k depreciated over the 17 years).  If I wait until April 2021 will I get hit with an underpayment fee - should I pay it now using a 1040ES payment ?  I don't normally have quarterly Estimated Taxes.

Thanks!

1 Reply
Nick-K-EA
Employee Tax Expert

Sold my rental - should I pay estimated payment to avoid fee

Depending upon your other tax details, you may end up owing a lot. And if you do, you'll have to pay extra. So if you believe you'll owe, then you should definitely make an estimate payment to cover it.

 

The easiest way to make an estimate payment is online:

 

https://www.irs.gov/payments

 

If you prefer, you can fill out a 1040-ES and mail in a check. You can get a blank 1040-ES and instructions here:

 

https://www.irs.gov/pub/irs-pdf/f1040es.pdf

Nick K, EA
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