I am estimating that we will pay 20% on this lump sum capital gain. Since we only found out about this windfall in July, I didn't pay any estimated tax for the first and second quarters. Can I send an estimated payment of $40,000. for September 15, and pay the balance when I file my actual tax return for 2017. If I do not make any estimated tax payments, will I be penalized?
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No, you should not split the estimates between third and fourth quarter. You should pay it with the the 3rd quarter payment to use the "annualized" method to avoid an underpayment penalty.
That said, for most people there is no underpayment penalty when there is a jump in income from the previous year. Increased quarterly payments are essentially optional. You can wait to pay at tax time
.You should make increased estimated tax payments for the current tax year if both of the following apply:
- 1. You expect to owe at least $1,000 in tax for
the current tax year, after subtracting your withholding and credits.
- 2. You expect your withholding and credits to be
less than the smaller of: 90% of the tax to be shown on your current year’s tax
return, or 100% of the tax shown on your prior year’s tax return.
(Your prior year tax return must cover all 12 months.)
If your goal is just
to avoid the underpayment penalty, then paying 100% of the prior year tax
liability is the “safe haven”
No, you should not split the estimates between third and fourth quarter. You should pay it with the the 3rd quarter payment to use the "annualized" method to avoid an underpayment penalty.
That said, for most people there is no underpayment penalty when there is a jump in income from the previous year. Increased quarterly payments are essentially optional. You can wait to pay at tax time
.You should make increased estimated tax payments for the current tax year if both of the following apply:
- 1. You expect to owe at least $1,000 in tax for
the current tax year, after subtracting your withholding and credits.
- 2. You expect your withholding and credits to be
less than the smaller of: 90% of the tax to be shown on your current year’s tax
return, or 100% of the tax shown on your prior year’s tax return.
(Your prior year tax return must cover all 12 months.)
If your goal is just
to avoid the underpayment penalty, then paying 100% of the prior year tax
liability is the “safe haven”
Since you have Windows version, you can do a trial tax return.
I put that LT capital gain on my tax return, there was no penalty for no payment of estimated tax.
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