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This year I have some significant (for me) long-term and short-term capital gains.

Enough to change my tax bill by thousands of dollars.

Do I need to pay quarterly estimated taxes?

(I realize that I've already missed the deadlines for the first three quarters.)

I'd like to pay a professional to help me figure this out, but I'm not even sure what I'm looking for. "Accountant" seems to broad. "Tax attorney" is more than I need.

Is "tax accountant" a thing?
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Do I need to pay quarterly estimated taxes?

Not if you will meet a safe harbor and feel comfortable that you will have the money to pay your 2020 tax bill by April 15, 2021. The most common safe harbor (especially if the 2020 tax liability will be more than 2019's tax liability was) is to have your 2020 withholding equal to at least 2019's tax liability (110% of 2019's tax liability if your AGI is greater than $150k).

You can find your 2019 tax liability on line 16 of your 2019 Form 1040, so you can figure your 2020 safe harbor amount - either 100% or 110% of the line 16 amount.

Then, pull out your most recent paystub, and look at the total Federal Income Tax (FIT) withholding so far this year, and the most recent FIT withholding. If they continue to withhold the same amount each paycheck for the rest of the year, will that be at least the safe harbor amount? If not, you can fill out a W-4 with your employer to withhold enough additional each check so that you will have the safe harbor amount withheld.

Is "tax accountant" a thing?

Yes, or you could just ask here.

AJ
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I'd like to pay a professional to help me figure this out, but I'm not even sure what I'm looking for. "Accountant" seems to broad. "Tax attorney" is more than I need.

The professional you are looking for is an Enrolled Agent (EA). EA's are the only federally licensed tax professionals. They are licensed by the IRS to represent taxpayers in all matters before the IRS. You can find a list of EAs at taxexperts.NAEA.org.

Ira
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Thanks, Ira!
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Hi AJ.

The most common safe harbor (especially if the 2020 tax liability will be more than 2019's tax liability was)…

Just to be clear: by "tax liability," are you referring to line 12a on my 1040 from 2019? Or line 16?

Have your 2020 withholding equal to at least 2019's tax liability (110% of 2019's tax liability if your AGI is greater than $150k).

To date I've had nothing withheld, based on the W-4 I submitted last year when I got my job.

(Last year: lower-paying job, 2+ months of unemployment, and a capital loss all helped to keep my tax bill relatively low. My "refund" exceeded my withheld taxes, thanks to the child tax credit and the additional child tax credit.)

But this year one of my kids turned 17, plus I have a better paying job, and will (I hope) have no period of unemployment. Also, isn't there some rule about being unable to claim the child tax credit if I have investment income over $3,000?

Can I just adjust my withholdings now to make sure sure an amount equal to 110% (of line 12a or line 16?) gets withheld between now and the end of the year?

[Y]ou could just ask here.

That's kind of you, and I really appreciate your answers, but:
1. I ask questions here, but never contribute. I feel like I'm imposing.
2. I don't want to post too many details about my finances in a public forum. I'm concerned that the details I do post may not be enough.

I only ask the questions that occur to me, but a tax professional will probably know important details that I don't even know about.

Thank you for your help!
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[Y]ou could just ask here.

That's kind of you, and I really appreciate your answers, but:
1. I ask questions here, but never contribute. I feel like I'm imposing


Can't speak to your other concerns, but by asking questions you do contribute. What you ask may well resonate with another person who was not even aware there was a need to ask a question. Questions like yours are the reason I monitor this board.

IP
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Can't speak to your other concerns, but by asking questions you do contribute.

Additionally, asking questions forces the questioner to refine what the questioner does not know--useful in and of itself.

And being able to explain a question requires that the person answering understand the subject thoroughly.

Contrary to what most people expect (would like?), the process is seldom a simple question followed by an answer that is immediately obvious once it is stated. Please see my accounting question and all the slight variations on an explanation, which finally resulted in my understanding: https://boards.fool.com/ot-question-for-accountants-34605133...

These boards and the Motley Fool were founded upon the idea that people could share their experience and knowledge with those trying to learn about money.

Kathleen
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1. I ask questions here, but never contribute. I feel like I'm imposing.

It's been a while since I've seen you around these here parts. Good to see you again!

In your previous travels around these boards (not this one specifically, but TMF in general) you've built up quite a few karma points with your help in various other areas. It's OK to cash in a couple of those from time to time by asking questions here.

Besides, as others have noted, it is in asking questions that we all learn. So please, ask away. You are not imposing, you are improving the discussion.

--Peter
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Sometimes I feel like I learn more from questions asked here than I do in all the tax classes I take for my Oregon Consultant License and Enrolled Agent renewals. Ask away. That's what we are here for.
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Just to be clear: by "tax liability," are you referring to line 12a on my 1040 from 2019? Or line 16?

As I said in my original post You can find your 2019 tax liability on line 16 of your 2019 Form 1040

Line 12a does not include things like the child tax credit (line 13a) or self-employment tax (line 15), which all figure into your total tax liability. Line 12a is (mostly) taxes on your AGI without all those other pesky details.

(Last year: lower-paying job, 2+ months of unemployment, and a capital loss all helped to keep my tax bill relatively low. My "refund" exceeded my withheld taxes, thanks to the child tax credit and the additional child tax credit.)

Did you have a tax liability on line 16, or was line 16 = $0?

But this year one of my kids turned 17, plus I have a better paying job, and will (I hope) have no period of unemployment. Also, isn't there some rule about being unable to claim the child tax credit if I have investment income over $3,000?

No, the child tax credit income limit is based on your AGI being more than $400k if MFJ, $200k for Single, not investment income. You can't claim the EIC (Earned Income Credit) if your investment income is > $3,600. Maybe that's what you were thinking of?

And even if your kid is 17, there's still the 'other dependent' credit. Here's a calculator to help you figure out which credits your kids make you eligible for: https://www.irs.gov/help/ita/does-my-childdependent-qualify-...

Can I just adjust my withholdings now to make sure sure an amount equal to 110% (of line 12a or line 16?) gets withheld between now and the end of the year?

Yes

AJ
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he most common safe harbor (especially if the 2020 tax liability will be more than 2019's tax liability was) is to have your 2020 withholding equal to at least 2019's tax liability (110% of 2019's tax liability if your AGI is greater than $150k).

This is a federal safe harbor. If your state has income taxes, the safe harbors are likely to be different.
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As I said in my original post…

You are apparently psychic, since you answered my question before I even asked it!

But seriously, it's impressive that you anticipated my question, and I should have read more carefully.

The amount on line 16 isn't zero, but it's close. (Less than $1K.)

You can't claim the EIC (Earned Income Credit) if your investment income is > $3,600. Maybe that's what you were thinking of?

That's probably what I was thinking of.

I am so pleased to learn that I can just adjust my holdings now and be okay. I posted the first message in this thread when I found myself wondering about quarterly estimated taxes, and until I read your reply, I've been worried sick about them.

I've already adjusted my withholdings, so I should be good for 2020. I've also made a rough calculation for my taxes, and set aside that much plus 10% to allow for error.

Thanks again, AJ for all your help.
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If your state has income taxes, the safe harbors are likely to be different.

Thanks, vkg, for bringing this to my attention.

I live in Michigan, so I just searched for michigan state income taxes safe harbor (using duckduckgo.com, my default search engine), and found this:

https://www.michigan.gov/taxes/0,4676,7-238-75545_43715-1827...

Excerpt:
===============
The Michigan Department of Treasury follows the Internal Revenue Service (IRS) guidelines for estimated tax requirements. Based on the IRS estimated income tax requirements, to avoid penalty and interest for underpaid estimates, your total tax paid through credits and withholding must be:

90% of your current year's tax liability
or 100% of your previous year's tax liability,
or 110% of your previous year's tax liability if your previous year's adjusted gross income is more than $150,000 ($75,000 for married filing separate).
===============

My 2019 Michigan tax bill was about $2100, and I've had about $1500 withheld so far in 2020. I've adjusted my W-4 to increase my withholding, so I should have no problem getting about $2100.

(And I'll keep on eye on it to be sure I do go above $2100!)

Thanks, vkg!
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