Sold our WI lake property on 8/14 with estimated capital gain of $217,000 Must we file WI return for the capital gain and the estimated tax now? Also, estimated Fed.

[dennis33]

Do I need to pay estimated WI capital gain now?

[Critter-3 · Accepted solution]

Estimates are not needed (unless they are required at closing)  IF  you either didn't file a WI return for 2019  or  your tax liability was zero. 

[Opus 17 · Accepted solution]

If you have a lump sum of income you will generally be required by the IRS to make an estimated tax payment by the due date for the quarter.  For property sold on 8/14, the payment is due 9/15.

Although the estimated payment is always required by law, you won't pay a penalty on your federal return so long as one of these three statements is true:

1. you owe less than $1000 when you file your return
2. your total payments into the system (from withholding and estimated payments) is at least 90% of your tax liability for 2020
3. your total payments into the system (from withholding and estimated payments) are at least 100% of your tax liability from 2019 (110% of 2019 liability for certain high income taxpayers.)

So you may need to make a payment, it will depend on your other income and withholding and last year's tax return.

You will owe a penalty in Wisconsin unless you have paid into the state system at least 100% of last year's tax liability. That should mean that if you are not a WI resident and did not file a WI return last year, you won't be penalized this year for not making an estimated payment.