Note that the rule regarding "high income" taxpayers is this: For someone who made over $150K in the prior year, a taxpayer can avoid the penalty for failure to pay estimated taxes if they pay 110% of last year's tax due or 100% of the current year's tax due. See page 2 of Instructions to Form 2210. The calculations suggest that someone who made over $150K in the prior year can avoid the penalty if they pay 90% of current year's taxes due. They need to pay 100% in estimated tax payments, not 90%, even if their income is below $150K in the current year.
Thank you! :) If the penalty for the Quarterly Estimated Tax is so small (~3%), would it be a better to NOT pay and use the money to invest it in the stock market instead? The risk is higher. But as long as I have the money at tax season, I should be fine right? 3% penalty VS the market's return. Earlier money in the market is better- usually.
Great video, thank you! How about penalties on stock sales? When selling stock, should we be paying an estimated tax on it before annual taxes are due in April?
The IRS wants you to pay estimated taxes as income is earned. If you wait until the tax filing deadline to pay income tax on the income generated from stock sales, you may have a penalty for failure to pay estimated taxes. If you sold the stock at then end of the year, then you may be able to use the "annualized method" to specify that you earned the income at the end of the year, and thereby reduce the number of days your estimated tax payment was late.
Great video thank you! Question: I had short term stock gains throughout the year unevenly. Using TurboTax to file, they put I have $0 income for Q1, 2, and 3. Q4 with the total year end stock income. Now I was suggested to make estimated tax payments evenly for the following year but..since they report $0 income for Q1, 2, and 3, can I skip out on these quarters and make a lump sum estimated payment on Q4?
Question, what if I made 290k last year and stopped working the last day of November 2021, thus far I'm not working in 2022 but my estimated tax payment is 47k for the 3rd quarter and 16k for the 4th quarter. I had no payments for the 1st and 2nd quarter because I had an extension. I have a penalty to pay along with a 2021 tax payment of 48K. Should I pay the estimated taxes since my current emplyment income is zero?
If I make the estimated tax payments and the government ends up owing me for 2021, would I recoup all of the payments I made when I file my taxes for 2021?
wish I could just pay my tax as a lump sum at the end of year😤
Very well put together, thank you!
Note that the rule regarding "high income" taxpayers is this: For someone who made over $150K in the prior year, a taxpayer can avoid the penalty for failure to pay estimated taxes if they pay 110% of last year's tax due or 100% of the current year's tax due. See page 2 of Instructions to Form 2210. The calculations suggest that someone who made over $150K in the prior year can avoid the penalty if they pay 90% of current year's taxes due. They need to pay 100% in estimated tax payments, not 90%, even if their income is below $150K in the current year.
great breakdown. thank you for sharing this information!
Great video! Thanks.
Helpful video, thanks for explaining well
Thank you! :)
If the penalty for the Quarterly Estimated Tax is so small (~3%), would it be a better to NOT pay and use the money to invest it in the stock market instead?
The risk is higher. But as long as I have the money at tax season, I should be fine right? 3% penalty VS the market's return. Earlier money in the market is better- usually.
This was very helpful. Thanks
Spot-on
Great video, thank you! How about penalties on stock sales? When selling stock, should we be paying an estimated tax on it before annual taxes are due in April?
The IRS wants you to pay estimated taxes as income is earned. If you wait until the tax filing deadline to pay income tax on the income generated from stock sales, you may have a penalty for failure to pay estimated taxes. If you sold the stock at then end of the year, then you may be able to use the "annualized method" to specify that you earned the income at the end of the year, and thereby reduce the number of days your estimated tax payment was late.
Great video thank you!
Question: I had short term stock gains throughout the year unevenly. Using TurboTax to file, they put I have $0 income for Q1, 2, and 3. Q4 with the total year end stock income. Now I was suggested to make estimated tax payments evenly for the following year but..since they report $0 income for Q1, 2, and 3, can I skip out on these quarters and make a lump sum estimated payment on Q4?
if $14,900 underpayment pays in Q1 for the entire this year, instead 4 separate installments; will that be any underpayment penalty on top of $14,900.
Question, what if I made 290k last year and stopped working the last day of November 2021, thus far I'm not working in 2022 but my estimated tax payment is 47k for the 3rd quarter and 16k for the 4th quarter. I had no payments for the 1st and 2nd quarter because I had an extension. I have a penalty to pay along with a 2021 tax payment of 48K. Should I pay the estimated taxes since my current emplyment income is zero?
If I make the estimated tax payments and the government ends up owing me for 2021, would I recoup all of the payments I made when I file my taxes for 2021?
Do I 100% get my penalty waived if I didn't owe any taxes last year and it's my first year of 1099 with w2?
I need help. 😫
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