Anticipate a sizable capital gain

When Are Estimated Tax Payments Required?

Generally, you must make estimated tax payments for the current tax year if both of the following apply:

1. You expect to owe at least $1,000 in tax for the current tax year after subtracting your withholding and refundable credits.
2. You expect your withholding and refundable credits to be less than the smaller of:
   • 90% of the tax to be shown on your current year's tax return, or
   • 100% of the tax shown on your prior year’s tax return (as long as your prior year’s return covers all 12 months).

Special Rules for Certain Groups

There are specific rules for:

• Farmers and fishermen
• Certain household employers
• Certain higher-income taxpayers
• Nonresident aliens

Managing Uneven Income

If your income varies significantly throughout the year (e.g., due to capital gains), you may be able to:

• Annualize your income and adjust your estimated tax payment for the applicable quarter.
• File Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts with your tax return to demonstrate that your uneven payments align with your income fluctuations during the year.

Learn More

This information is sourced from the IRS.gov website. If you're in the Dallas-Fort Worth (DFW) area and need assistance, consider consulting an IRS attorney in Dallas. You can call our office at (469) 626-7760 to schedule a consultation.