If you sell around $500k–$750k in stocks, do you need to pay estimated taxes quarterly, or can you just pay everything when filing taxes? Or is there a penalty if you wait until tax season.
This is all long term capital gains. Thanks!
Taxes on selling $500k–$750k in stocks
byu/Bath-Kitchen intax
Posted by Bath-Kitchen
10 Comments
it depends
if you are on track to cover your required estimates/withholding, you can wait to pay
Is that the gain or gross?
The real answer is “It depends,” and it’s worth addressing given the amount. I’d suggest consulting with a CPA and see if you should be making estimated payments and discuss some strategies to reduce the tax bill.
For estimated payments, the first thing I’d look into is “prior year safe harbor.” As long as your regular income and withholding for 2026 is 110% of 2025, you don’t need to make estimated payments for Fed. However, some states don’t follow these rules. For example, I live in CA and they don’t let you pay based on prior year tax liability if your income is over $1MM, which you could be given a cap gain of that size. So, you need to look at state tax implications as well.
If you meet the safe harbor requirement and you can afford to pay it all in April, then you can wait until you file without penalty. Just make sure that you are withholding 100% of last year’s taxes. (110% if last year’s AGI>$150k). Look at line 24 of your 2025 1040. Line 11 for AGI
If you have that much in gains you have enough to ask a professional and strategize instead of Reddit
It also depends on when the sale happens. If you do it 12/30, you can file a waiver with the 2210 form stating all of this income is from the last quarter and the three missed quarters of quarterly payments doesn’t exactly qualify.
If that amount is the capital gains then you are going to go outside of the 15% bracket and some of it will be taxed at 20%. If you are able to wait and sell some of it next year then you could stay within the 15% bracket.
You won’t need to pay all of it in estimated taxes. Only enough to comfortably exceed the 110% safe harbor rule. Then you can put the rest in a fund like SPAXX and earn 3-4% until tax time.
Congrats on those gains!
You have 4 choices: 1) Rely on the fact that you will have withheld as much as the prior year’s tax (the safe harbor) or 110% of it depending on your income- then you can pay the CG tax on Jan 15; 2) Do the extended annualized part of Form 2210 and state that your CG came in the fourth quarter, therefore making it due Jan 15; 3) Find a loss and realize it in the quarter where the gain happened.; 4) Pay the CG tax in the quarter where the CG actually occurred.
The federal penalty on late estimated tax payments paid on April 15 is about 4% of late taxes this year. (That takes into account penalties are prorated by days late for four quarters of different times which works to .66 times 6%.)
Then the federal gains tax has four brackets of 0%, 15%, 18.8% and 23.8%. So assuming you have gains of $500K after subtracting the purchase price, the tax would be roughly $77K and penalty around $3K. Is it worth the trouble of four estimated payments to save $3K in penalties?
It depends on what your cost basis in the stocks are and whether the gains are short-term or long-term gains as well.