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Frequently Asked Tax Questions

Estimated Tax - Large Gains, Lump-sum Distributions, etc.

  1. If I anticipate a sizable capital gain on the sale of an investment during the year, do I need to make a quarterly estimated tax payment during the tax year?

Rev. date: 08/04/2012

If I anticipate a sizable capital gain on the sale of an investment during the year, do I need to make a quarterly estimated tax payment during the tax year?

You must pay estimated tax for the current tax year if both of the following apply:
*NOTE:  Certain taxpayers with higher adjusted gross income must substitute 110% for 100%.  If you are making estimated tax payments you can:
You may be able to annualize your income and make increased estimated tax payments in the later quarters.  You would have to file Form 2210 with your tax return because we do not know when you received the income and that you received it unevenly over the year.
NOTE:  Publication 505, Tax Withholding and Estimated Tax, has a Qualified Dividend and Capital Gains Worksheet to help estimate the additional tax liability.