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Marvin,EA
Marvin,EA, Enrolled Agent
Category: Tax
Satisfied Customers: 1663
Experience:  Enrolled to Represent Taxpayers Before The IRS
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In 2007 I worked and paid quarterly tax payments. When I completed

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In 2007 I worked and paid quarterly tax payments. When I completed my 2007 taxes, my program suggested I pay quarterly payments of $1800 each, but I haven't paid any since I am NOT working in 2008, thus not needing to make the quarterly payments. However, in the past couple of months I have had a nice gain in the stock market on stocks I sold. Should I send a payment to the IRS now, or wait for the year end to see how my market gains end the year. I don't want a penalty, for not making payments, but I didn't see the reason for making any since I am not working.   Thank you!
Submitted: 5 years ago.
Category: Tax
Expert:  Marvin,EA replied 5 years ago.
Hello and thank you for using Just Answer. Do you think you will receive a gain from the sales of stock for 2008?
Customer: replied 5 years ago.
Yes I do think there will be a gain from sales of stock. Short term gain of over $50,000 to date. I don't think I'll be able to minimize that to $0 - got very lucky with one stock in the past 1.5 months. Only realized gain in August.
Expert:  Marvin,EA replied 5 years ago.

Since most of your gain will be short-term capital gains your should pay in the third quarter 31% of you gains to Federal estimated income tax. You should also do the same in the fourth quarter.

Customer: replied 5 years ago.
Not sure I understand your response. If I pay 31% on the gain in the third quarter and 31% in the fourth quarter, I am paying 62% on my gain - I thought the short term capital gain rate is 25%.

Let's use some numbers.   If my gain is $50,000 and I pay $6,000 in the third quarter and $6,000 in the fourth quarter, I will have paid $12,000 total tax or 24% on the gain. Wouldn't this suffice? Plus, if my gain is $50,000 now, I could possibly have some losses before the end of the year to offset the gain, or it could go the other way and I would have more gain, but for now, let's just say the end of the year gain is $50,000.
Thanks.
Expert:  Marvin,EA replied 5 years ago.

Short-term capital gains rate is tax at a taxpayer's ordinary income tax rates. For 2008, individuals are subject to an underpayment penalty unless total withholding and estimated payments equal the smaller of:

 

90% of the tax show on the 2008 return.

 

100% of the tax shown on the 2007 return (110% if the taxpayer's 2007 adjusted gross income , or AGI, was over $150,000 ($75,000 for MFS)

 

 

What was your tax for 2007?

Customer: replied 5 years ago.
Total Federal tax for 2007 was $14,480. By end of year we will have paid approximately $7000 through my husband's job. AGI is < than $150,000. Last year AGI was $110,525.
Thanks!
Expert:  Marvin,EA replied 5 years ago.

If your husband will pay $7,000 in Federal income tax withholding this year you should pay at least $7,480 in estimated tax payments to be safe and to avoid underpayment tax penalty.

Marvin,EA, Enrolled Agent
Category: Tax
Satisfied Customers: 1663
Experience: Enrolled to Represent Taxpayers Before The IRS
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