guess I am confused why I am paying this penalty and interest. I am paying on this years return the taxes for the investments I sold in 2016. 2016 was the first year ever having sold the total that was way unusual compared to previous years. I don't understand the penalty for doing so. thanks.
You are generally required to pay in 90% of your taxes for the year before the end of the year to avoid an underpayment penalty. Even though you were not required to have taxes withheld from your investment sales, you are still obligated to pay an adequate sum (usually by making estimated tax payments) before the end of the year.
If your 2016 income was much higher than your 2015 income, and you paid in for 2016 at least the same amount as you paid in taxes in 2015, you can avoid the penalty. There are other options that may reduce or eliminate the penalty.
Please go to Federal Taxes>Other Tax Situations>Underpayment Penalties and go through the interview to see if you qualify for a reduction or elimination of your penalty.
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