The Motley Fool Discussion Boards
Financial Planning / Tax Strategies
|Subject: Re: Two Related Tax Issues||Date: 7/5/2008 10:46 AM|
|Author: irasmilo||Number: 101259 of 125218|
which the gain was earned. I understand the reason for that, as taxes on earnings are due when they are earned during the year. My questions pertaining to estimated taxes are these:
First, in the case of the first, second and third quarters, the forms for the quarterly tax estimates have due dates that fall before the actual end of the last day of those quartersTaxes due for the quarter ending June 30, for example, are due somewhere around June 15. I didn't decide to sell one of my equities until June 30. Taxes on that gain were already LATE on the day the gain was realized. Is there a penalty due if I submit the form and pay the tax on that capital gain along with any gain for the quarter ending September 30?.
No, they don't. Tax "quarters" are not calendar quarters. Tax "quarters" end on 3/31, 5/31. 8/31. ans 12/31. Your 6/30 stock sale is in the third quarter.
Second, If I sell more than one equity, one having a capital gain and one with an offsetting capital loss which, resulting in an overall slight loss, are the estimated taxes on the gain portion still due for the quarter in which the gain was realized? My initial thought was to assume not, seeing that there was no actual overall gain. However, as screwed up as the IRS is, my second thought
Estimated taxes are not necessarily due on a gain in the quarter sold. Your estimated tax liability at any point in time is based on your total income, not any specific transaction. Additionally, there are a number of safe harbor provisions that may allow you to pay far less in estimated taxes than your final liability for the year (with the balance paid on 4/15 with your tax return). There are a number of estimated tax calculators available that will determine the minimum estimated tax payment for your specific circumstances. Edcosoft, who often posts here, has one of the better ones.
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