When do you have to pay taxes on capital gains?

Question

Let's say I put 50k in a stock and it doubles and I sell it. Now I have 100k, but I owe taxes on 50k. Let's say I sold the position at the beginning of the calendar year. Can I wait until April of the following year to pay the taxes?

Answer 1

You should file an estimated taxes form(1040-ES) in the quarter you realized the gain.

If you end up owing too much, the IRS will tack on penalty and interest.

Answer 2

Not really. Actually, it depends. (Most of the previous advice is either incomplete or just plain WRONG!)

The tax on $50k in capital gains could vary from as little as $2,500 to as much as $17,500 depending upon how long you held the stock and your marginal bracket. Since both of those figures exceed the $1,000 safe harbor rule for underpayment of taxes without a penalty you MAY have to make an estimated payment on the next estimated payment due date to avoid penalties and interest for underpayment of tax. The estimate due dates are 4/15, 6/15, 9/15 and 1/15 of the following year.

There are 2 other safe harbor exclusions that may help you dodge the bullet as well. If you have paid in at least 90% of your current year's tax liability OR 100% of LAST year's tax liability you won't be facing any penalties or interest for underpayment.

If any of the 3 safe harbor exceptions apply to you, just set aside enough to pay the tax on April 15th and don't worry about it. But if none of them apply, you'll need to make a sufficient estimated payment to either cover the entire tax on the gain OR get you into one of the safe harbor exceptions.

Answer 3

You *may* be able to wait until April of the following year to pay the taxes. However, if you end up owing the IRS more than a very small amount when you file (I think it's $1000), they will charge you interest. Our tax system is pay-as-you-go, not pay it all on April 15th. That's why the IRS requires your employer to withhold payroll taxes from every check instead of allowing you to write a big check at the end of the year. If you owe a lot when you file, they can also require you to file taxes quarterly instead of annually in future years. Be very careful looking for tax loopholes. The IRS bites back hard.

Answer 4

If I read your question correctly, you sold your stock on the first business day after January 1. Let's just say it was Jan. 2, 2007. Your taxes on the capital gains would be due by April 15, 2008. The realized capital gains are taxable income for the year 2007.

Answer 5

you pay taxes once a year, april 15th. the amount of the tax will depend on how long you held the stock before selling. long term or short term capital gains rates are different. both are due on april 15th. you can if you want 'withold' some of your gain when you sell the stock to help you pay the taxes. but still, they arent due until april 15th

Answer 6

You can wait, but if you wind up owing too much additional tax, IRS may charge a penalty.

Answer 7

You pay it when you file taxes for the year you sold it in. But,if you don't file your taxes for a year or two, then you don't have to pay them for a year or two. Of course, you will probably have some penalties if you don't pay them on time.

Answer 8

i believe that you are correct, cause It's usually around april 15th that the gov. requires you to file your taxes,

By the way you could also file for an a extension, possibly allowing you to pay it later.

Answer 9

capital gains are just that-a gain in income for the calendar year. sure, wait to pay.............your return only needs to be postmarked by midnite.

Answer 10

yes