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Financial Planning / Tax Strategies


Subject:  Re: Two Related Tax Issues Date:  7/5/2008  11:47 AM
Author:  Opv1419 Number:  101260 of 127613

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.

Thanks. Very helpful.

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.

So rather than owing taxes, per se, on the specific LTCG, it sounds like I would have to look at cumulative total income for each quarter and just assess whether taxes through regular withholding are sufficient to cover any gain realized. To the extent there are residual taxes due, I presume that would be the amount I would need to pay on the quarterly tax estimate. Otherwise, I presume no additional taxes would be due. Makes sense. I have an Excel spreadsheet that will likely help me in that regard.

Thanks for your help.
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