Hi,

A person who pretty much was on target last year with IRS withholding this year cashes out lots of stock. So does this person have to pre-pay the IRS the long term cap gains before the end of the year? Assuming there is an IRS next year...

Thanks,

-z

-- Zygote (zygote1@zygote1.zygote1), November 19, 1999

Answers

I think that the answer is no.

But I don't play an attorney on TV nor have I been trained in the law.

You should ask a qualified attorney or CPA.

-- LM (latemarch@usa.net), November 20, 1999.

Zygote, you don't have to prepay. You have declared that you do not need to have money withheld. Wait until we all file in April and we'll all see what gives--that's my opnion.

-- Mara (MaraWayne@aol.com), November 20, 1999.

You have declared that you do not need to have money withheld.

that was true for 1998. but this year i did some diversification and some straightforward selling off. i've never done that before which is why now i am getting to wondering just what the heck will keep the friendly irs agents away.

-z

-- Zygote (zygote1@zygote1.zygote1), November 20, 1999.

"Pre-pay" -- Do you mean the quarterly estimated payments?

The payment for the 4th quarter (Oct.-Dec.) is due Jan. 17.

The penalty for missing that date and paying the balance due by April 15 would be about 2% (W.A.G.) of the amount due.

That penalty would likely be waived if the amount due April 15 is (a) $1000 or less, or (b) your '99 withholding was equal to or more than your '98 TAX amount. However, the (b) exception would NOT apply if your income is up above the $100,000-something range AND/OR it had shot up by some percentage like %40 or so. So then you'd have to have made the January payment to get out of the 2% or whatever penalty

I'm being deliberately vague about the numbers here at 2 AM because (a) I don't wanna look up no steenking IRS rules and spoil my evening, and (b) you'd better look 'em up for yourself to get your details right.

In any event, the worst penalty (5% per MONTH) is to file late (past April 15 w/o Form 4868 extension) owing IRS money. I wonder what kind of tax world we'll be in come April?

-- me (back@again.ohboy), November 20, 1999.

"Pre-pay" -- Do you mean the quarterly estimated payments?

No, i don't think so, i mean just make a one time pmt before jan. 1 so as to avoid a too-big pmt on next apr 15 for the 99 tax. presuming of course the irs survives y2k :-).

-z

-- Zygote (zygote1@zygote1.zygote1), November 20, 1999.