if you get a big capital gain, do you have to pay taxes before the end of the year? how big?

Answer 1

Yes and no.

It's more helpful to look at ALL of your income for the year.

Who Must Make Estimated Tax Payments
In most cases, you must make estimated tax payments if you expect to owe at least $1,000 in tax for 2006 (after subtracting
your withholding and credits) and you expect your withholding and credits to be less than the smaller of:

1. 90% of the tax shown on your 2006 tax return, or

2. The tax shown on your 2005 tax return (or 110% percent if your prior year AGI is greater than $150,000).

In other words, if you normally get a refund on your return each year, then you can wait until April 15th to pay whatever capital gains tax might be owed. Take a look at your current withholdings and figure what the total will be for the year. If this is more than last year's tax (or 110% more if you make more than $150K), then you are safe until next April.

If you are self employed, you should have set up estimates based on last year's taxes in the first place. The same situation would apply. The only down side is that for next year's (2007) estimates, you'll be paying in slightly more because of what your 2006 tax will be. That is if your income flucuates.

The other answers are correct as to what form you need to use to make an estimate however the timing is almost more important. Why give your money to the government any sooner than you have to! It doesn't earn interest for you.

If you need further assistance, you can contact me.

Answer 2

Yes, you should file estimated for the quarter in which you received the gain. Estimated amount paid should cover what you expect to end up paying in taxes. so would depend on your marginal tax rate.

If you receive the gain in the fourth quarter of the year, you don't need to file estimated as long as you file your return and pay all tax due in January of the following year.

Answer 3

Taxes are actually due when the income is received or the gain is realized. You should file a 1040ES for the quarter in which the gain was realized and pay 15% of the net gain with the 1040ES.