Can the IRS fine you for underpayment if you get lucky in the stock market this year?

Question

Let's say I make $40,000, but I get lucky on a few stocks and I get $15,000 in capital gains this year. Let's also stipulate that this was unexpected, and the previous years I made an average of around $3,000. Will the IRS fine me next year for the underpayment penalty if those stock sales put me well over the $1,000 limit?

(Let's say I got a refund for this year, so my taxes paid in full.)

Answer 1

If your total amount paid in is at least equal to your total tax for the previous year, there won't be a penalty for under-withholding. You might, of course, have a very large check to write with your return if you don't make estimated payments.

The $1000 limit for amount owed is another reason why you wouldn't be penalized, but you only have to meet one of them.

Answer 2

Any time that you owe more than $1000 with your return you are subject to the underpayment penalty. You should make quarterly estimated tax payments if you had any any idea that you were going to sell any stock. If you make the payment at the time that you make the sale you should be able to avoid the penalty. The IRS will take the position that you knew or should have known that you were going to have a gain on the date of the sale. Nothing is fair or logical about taxes!!

Answer 3

Pay taxes on a quarterly basis. Hire an accountant to ensure you're paying enough taxes.