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Originally Posted by AJ32162
I'm not sure why you would make such a sizeable quarterly payment so early in the quarter. While the IRS DOES expect you to pay the taxes due in the quarter in which the income was earned, you don't know what your total quarterly income will be. It may very well be more than the $82K in realized capital gains income you have received thus far in the first quarter. Since you may not actually be in the 32% tax bracket this early in the tax year (your tax bracket may be significantly lower), you may have overpaid your first quarter taxes. As you know, your tax bracket increases throughout the year as additional income becomes taxable. Remember that your Standard Deduction is subtracted from your first quarter earnings, thereby reducing your first quarter tax liability.
Since you are clearly not well versed in computing and making estimated quarterly tax payments, the link listed below will explain the Safe Harbor Rule which may be your easiest and best tax payment solution. Estimated quarterly payments can be made in equal amounts if you decide to use the method in which you pay 100% of the taxes owed/paid in 2020. If you decide to use the 90% Rule, you will to need compute your taxes quarterly and pay estimated taxes on the income as it is earned and on capital gains in the quarter in which they are realized throughout the year. A realized capital losses during the 2nd and subsequent quarters will reduce your overall tax liability, as you will have most likely overpaid your taxes in a previous quarter(s). So, any overpayment in the previous quarter needs to be factored into the current quarter's estimated tax payment. Your quarterly estimated tax payments for 2021 can be accurately calculated (within about a hundred dollars) by using the 2020, Turbo Tax or H&R Block tax software. Just enter your taxable income and quarterly gains/losses quarterly. Don't forget to enter any witholding you may have had during each quarter.
Avoid Penalty For Underpaying Estimated Taxes | H&R Block
For future reference, estimated tax payments can be made online on the IRS website. They will provide you with confirmation of receipt which can be confirmed on their website. I hope this helps. |
I always use the prior year method to calculate my quarterly payments. Take the total tax number on Line 24 from the 2020 Form 1040 and divide by 4. That will be my quarterly estimated tax payment for 2021. As I understand it, even if my 2021 income doubles or triples from 2020, I will not owe a penalty for underpayment of estimated taxes.