When should I pay capital gains tax from selling stocks?

Question

Let's say I have short term capital gains of $5,000 from selling stock A and long term capital gains of $10,000 from selling stock B. Both stocks were sold on 06/10/2006. To avoid any penalty should I pay federal income tax for those gains right away? Or I can wait until April 15, 2007?

Answer 1

If the gains are big enough that you will not have 90% of the tax due paid in through withholding you should have made an estimated payment on 6/15. You can still make an estimated payment and be fine. However, there is an exception to the penalty if you have paid in enough to cover the amount of tax paid for the prior year. This will usually cover you.