When would capital gains tax be due for a stock sale in Dec 2021 vs Jan 2022

[piperpilot12w]

Currently refinancing and paying down the mortgage by selling some stock that is a long term gain. Trying to decide if there is a benefit to waiting until Jan to sell it.  If I were to sell the stock in January 2022, when would the capital gains tax be due? Would the tax be due in 2023 or would I have to make a quarterly tax payment in 2022?  The amount of stock is roughly $40,000 with a long term gain of about $15,000.

[VolvoGirl]

Well it would go on your 2022 return in 2023.  So you wouldn't owe the tax until then.  But you should consider sending in a quarterly estimated payment so you don't end up owing too much and to avoid any penalties if you owe too much.  They want you to pay in evenly during the year.  You have to figure out how much tax would be on the gain based on your total income for the year.  You could even increase the withholding taken out at work to cover the extra tax.  

[Mike9241]

due to the special tax rates afforded long-term capital gains and qualified dividends you could owe $0 on the capital gain. if you have a state tax you might owe the state.

there is no way for us to know whether it would be cheaper to sell in Dec '21 vs Jan '22

you may need to do some tax projections based on where you think you'll be for 2021 and do your best to estimate 2022.  in theory one year you could pay about 24% on the gain while in the other year you may pay 0% or it might be 0% in either year or 24% in either year. it depends on what you'll have in the way of other income and deductions in each year.  there are also potential changes in the tax laws that really makes it a guess. 

[piperpilot12w]

Thanks to both of you for your thoughts.

[fanfare]

If your withholding and estimates in 2022 are at least 100% ( 110% for certain high income taxpayers) of your 2021 tax, there will be no penalty on your 2022 tax return, regardless of any jump in income.

Since interest rates are so low, why would you want to give up potential stock market growth to reduce debt?