Author Topic: Safe Harbor Question  (Read 239 times)

mmmbuckeye

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Safe Harbor Question
« on: December 30, 2018, 03:41:35 PM »
So I worked at a place for 12 years and was let go last November. I got 12 weeks severance (which added to my income).
This year I got a new job in February and sold a large amount of stock in October. This stock is long term capital gains.
My current job is a state one so I don't pay social security. My question is last year because of severance and working through November I had a high income and paid tax.This year I will have paid a little less in taxes but because of the 6 figure sale of stock owe a substantial amount. Do I pay that now by Jan 15 or by April 15th? Should I make small estimated tax payment to make sure i have paid as much tax as last year?

KeithTax

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Re: Safe Harbor Question
« Reply #1 on: January 01, 2019, 03:35:32 PM »
So I worked at a place for 12 years and was let go last November. I got 12 weeks severance (which added to my income).
This year I got a new job in February and sold a large amount of stock in October. This stock is long term capital gains.
My current job is a state one so I don't pay social security. My question is last year because of severance and working through November I had a high income and paid tax.This year I will have paid a little less in taxes but because of the 6 figure sale of stock owe a substantial amount. Do I pay that now by Jan 15 or by April 15th? Should I make small estimated tax payment to make sure i have paid as much tax as last year?

Taxes are due when the income is earned so the January 15th estimated tax due date is valid. However, if you pay at least what your tax liability was last year and pay in full by the due date you also avoid an interest penalty. (There are a few factors that modify this, but my answer covers the majority of situations.)

Another issue to consider is Opportunity Funds. You have 180 days to invest the gains into an OF to defer tax on the gains, plus some of the gains eventually become tax-free if a few simple rules are followed.  Here is a post on Opportunity Funds:

https://wealthyaccountant.com/2018/10/23/opportunity-funds-deferred-and-tax-free-gains/