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Merlo
Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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I just sold some land for 35,000. How do I figure the ...

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I just sold some land for 35,000. How do I figure the amount due to the IRS now or how much should I pay right now?

HelloCustomer

Can you tell me when you first purchased the land and what the original purchase price was? This will help me better determine what you will owe in taxes. Thanks.

Customer: replied 9 years ago.
Paid 23,500 in 1995. Sold may 2008 for 35,000. Bare land only in washington state.

Hello againCustomer

You are going to owe tax on your gain only, which is $11,500. You will be taxed at the long term capital gains rate, which is currently capped at 15%, so the federal taxes due as a result of this sale will be $1,725.00.

In general, no estimated tax payments are required if your withholding and credits add up to at least as much as your prior year's tax. In other words, if you are currently employed and having taxes withheld from your check, and if the total taxes withheld will be at least the same as what your last year's taxes were, then you do not need to pay any taxes at this time as a result of selling the land.

If, on the other hand, you do not think you will meet that requirement, then you should submit estimated payments to the IRS on Form 1040ES. These estimates are filed quarterly. The first quarterly installment has already passed for this year, so you would just simply file for the remaining 3 quarterly payments.

If you found this answer helpful, kindly press the "Accept" key. Positive feedback is also greatly appreciated.

Thanks for the question.... by the way here is a link to the Form 1040ES if your need it

http://www.irs.gov/pub/irs-pdf/f1040es.pdf

 

Merlo and other Tax Specialists are ready to help you

By the way, I forgot to mention that the same rules would apply for your state taxes as far as making estimated payments. Let me know if you need me to send you a link for the state forms as well, and for which state.

If this answer has been helpful, kindly press the "Accept" key. Positive feedback is also greatly appreciated.

Thanks again.