Question

When to pay capital gains?

Forum|Forum|7 years ago
June 1, 2019
1 reply
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Earlier this week I sold some mutual fund shares. I realized a capital gain of over $25,000. When do I have to pay the taxes on the capital gains? Next year when I receive my 1099 tax form from the mutual fund company or do i have to make a tax payment this quarter?

TurboTax Deluxe Windows

C

CherylW

Employee

You are taxed on capital gains in the year that you disposed of (sold) the stock. You will report the sales price minus cost basis on your 2017 return, and pay tax then.

Take the tax you paid in the previous year (in your case, 2016). Calculate 90 percent of the tax you estimate you will owe in the current year (2017). Compare the two, and take the smaller number.

For example, you paid $500 as tax the previous year. This year you estimate you will pay $1,000, and 90 percent of that is $900. The smaller of the two numbers is $500.

Now compare the total of any withholdings and credits you may have to this number.

If you expect to owe at least $1,000 in taxes, after all deductions and credits, AND your withholding and credits are expected to be less than the calculated number — in this example $500 — then you should file 1040-ES.

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cyclingjonAuthor

Thank you. I have a follow up question. Can I just add the extra amount in Turbo Tax when I complete this year's tax filing instead of submitting a 1040-ES?