Hi experts, my income last year was not much, but this year Q1 I received an unexpected large capital gain.
Based on my research, there is something called "safe harbour" rule? – based on my understanding if I already paid >= last year's tax I don't need to make quaterly payments? Due to change of job and I didn't work full year last year, this year my monthly W2 is already 30%~40% more than last year, so the monthly tax payment should fully cover and be more than last year's tax any way.
The capital gain I have now is 30%~50% of my annual W2 income, but obviously nobody knows by year end I might have more losses that offset this. So if I pay quaterly now by year end I might get returns.
I wonder if I need to start making quaterly tax payments? If so when should I start and how much should I roughly pay? Thanks!
If I have an unexpected large capital gain Q1 2026 do I need to start making quaterly payments now?
byu/MediocreRiver1166 intax
Posted by MediocreRiver1166
2 Comments
I personally increase my witholding from my paycheck to make up for the higher tax bracket, so I don’t need to then pay quarterly taxes.
Why not consider increasing your withholdings from your paycheck to cover it through the year? Figure the total cap gains, multiply by your expected marginal tax rate, divide by the number of paychecks left this year, then submit an adjusted W-4 with the same checkboxes and settings as before but with that calculated amount on line 4(c).
The positives there is that withholdings – any withholdings even from withdrawals from brokerages – is considered “timely” by the IRS.
The safe harbor rules is where you would avoid penalties and interest by:
– Your filed tax return shows you owe less than $1,000 or
– You paid at least 90% of the tax shown on the return for the taxable year or 100% of the tax shown on the return for the prior year, whichever amount is less. If your adjusted gross income (AGI) for 2023 was more than $150,000 ($75,000 if your filing status for 2024 is married filing separately), substitute 110% for 100%.
[https://www.irs.gov/payments/underpayment-of-estimated-tax-by-individuals-penalty](https://www.irs.gov/payments/underpayment-of-estimated-tax-by-individuals-penalty)