If I anticipate a sizable capital gain on the sale of an investment
during the year, do I need to make a quarterly estimated tax payment during
the tax year?
If you first receive income subject to estimated tax during a period other
than the first quarter, you must make your first payment by the due date for
the period the income is received. You can pay your entire estimated tax by
the due date for the period the income is received, or you can pay it in installments
by the due date for that period and the due dates for the remaining periods.
If you are making estimated tax payments you can increase your quarterly
estimated tax payments or increase your Federal income tax withholding to
cover the tax liability. If you have the proper amount withheld you may not
be required to make estimated tax payments nor have to file Form 2210 (PDF), Underpayment of Estimated Tax by Individuals, Estates and
Trusts, with your tax return (as you would if you just increased the
remaining estimated tax payments). If you wait and make increased estimated
tax payments in the later quarters, you would have to file Form 2210 with
your tax return because we do not know when you received the income. Since
you really did not receive the income evenly throughout the year, you have
to tell us when the income was received by filing Form 2210.
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