Will have large capital gains in Q2 this year. Do all the taxes need to be paid in Q2, or can I spread them out between Q2->Q4?
Thanks.
capital gains taxes need to be paid in quarter they occur?
Re: capital gains taxes need to be paid in quarter they occur?
Q2 to avoid potential underpayment penalty.
A workaround is to have extra tax withheld (like from a paycheck or IRA distribution) instead of paying an estimated tax. Tax withholding is always treated as timely regardless of which quarter it was withheld.
A workaround is to have extra tax withheld (like from a paycheck or IRA distribution) instead of paying an estimated tax. Tax withholding is always treated as timely regardless of which quarter it was withheld.
Re: capital gains taxes need to be paid in quarter they occur?
Right. I use my RMD at year end to even up total tax payment through withholding. A really large capital gain could be more than could be covered by the RMD so then you should pay in estimated tax for that quarter.
Re: capital gains taxes need to be paid in quarter they occur?
Let's also not forget about the potential safe harbors involving 2020 tax liability.
Re: capital gains taxes need to be paid in quarter they occur?
If you reach 110% of 2020 taxes via *withholding* (estimated tax payments NOT included), then timing doesn't matter. This is accomplished on page 1 of Form 2210.
If you want to reach 110% of 2020 taxes via withholding + estimated tax payments, then timing absolutely matters. Exactly how it matters depends on which of the underpayment penalty calculation methods you chose from your options on pages 2-4 of Form 2210.
For more discussion see: viewtopic.php?p=5853220#p5853220
Re: capital gains taxes need to be paid in quarter they occur?
If you choose "spread estimated payments over all four quarters," note that the first (April) one is due next week.