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Questions: 1) Was I suppose to pay taxes on the capital gains as they were realized. I had
assumed that I could wait until the end of the year, since I could have losses that would offset
the gains. 2) If I pay 105% of the taxes that I paid in 1998, then have I found a Safe Harbor?

With the increase in salary it looks like your withholding this year will just about equal 1998 taxes. Make sure it does with an extra withholding if necessary, then nothing more due until you file in April. Your safe harbor is 100% of 1998 taxes since your AGI waas under $150K.

Next year, this won't work because you'll expect lower taxes than 1999. Your withholding covers normal income but I suggest you calculate your tax due each quarter and pay an installment, or better yet, wait till November and pay enough in extra withholding so total withholding is at least 90% of what you estimate 2000 taxes will be. This can get dicey, but the worst that can happen is the withholding covers the first 3 quarters for a safe harbor and you pay an installment in January for any year end suprises, and file a 2210 and Schedule AI, which TurboTax will do for you if you have the right quarterly information. Or get a 2210 Calculator if you don't use TT.

You don't have to pay a preparer to do a 2210. You can tell him not to, and you do it and staple it to your return.. Ed
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