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jgordosea
jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3159
Experience:  I've prepared all types of taxes since 1987.
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How do I pay taxes on a stock buyout payout with the payout

Customer Question

How do I pay taxes on a stock buyout payout with the payout didn't including withholdings?
Submitted: 1 year ago.
Category: Tax
Expert:  jgordosea replied 1 year ago.
Greetings,
When you have a transaction, such as stock sale, that does not have tax withheld either there will have to be additional withholding on other items or you will make an estimated payment.
The IRS site with information on estimated payments is at
http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Estimated-Taxes
"If you did not pay enough tax throughout the year, either through withholding or by making estimated tax payments, you may have to pay a penalty for underpayment of estimated tax. Generally, most taxpayers will avoid this penalty if they owe less than $1,000 in tax after subtracting their withholdings and credits, or if they paid at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller."
If you are filing as an individual, you should use Form 1040-ES, Estimated Tax for Individuals, to figure and pay your estimated tax.
See http://www.irs.gov/file_source/pub/irs-pdf/f1040es.pdf
Online software can be used to help calculate your estimated tax.
For example, see https://turbotax.intuit.com/tax-tools/tax-tips/Small-Business-Taxes/Estimated-Taxes--How-to-Determine-What-to-Pay-and-When/INF12007.html
"You can use TurboTax tax preparation software to do the calculations for you, or get a copy of the worksheet accompanying Form 1040-ES and work your way through it. Either way, you'll need some items so you can plan what your estimated tax payments should be:
•Your previous year's return. Use your previous year's federal tax return as a check to make sure you include all the income and deductions you expect to take on your current year's tax return. You should also look at the total tax you paid if you are going to base your estimated tax payments on 100 or 110 percent of your previous year's taxes."
Usually there will also need to be additional withholding or estimated tax for states that do collect an income tax in addition to the federal estimated payment.
Please ask if you need clarification.
Thank you.

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