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OK so I made my first trade of the year, I made roughly 18000 in two days (~10%) . Sold it this morning. How do you handle taxes? What do I do? Should I send in the estimated taxes to the IRS now or wait until next year? Won't I incur a penalty if I wait?
If you continue to trade and are profitable you should file quarterly. Essentially if you expect to owe more than 1000 dollars in tax at the end of the year you need to file.
Estimated taxes are paid quarterly. There is no point in paying until close to the quarterly deadlines, since you could have offsetting gains/losses between now and then.
OK so I made my first trade of the year, I made roughly 18000 in two days (~10%) . Sold it this morning. How do you handle taxes? What do I do? Should I send in the estimated taxes to the IRS now or wait until next year? Won't I incur a penalty if I wait?
Pay quarterly. I might be Conservative for the first two estimated payments.
If you did not pay enough tax throughout the year, either through withholding or by making estimated tax payments, you may have to pay a penalty for underpayment of estimated tax. Generally, most taxpayers will avoid this penalty if they owe less than $1,000 in tax after subtracting their withholdings and credits, or if they paid at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller.
If you did not pay enough tax throughout the year, either through withholding or by making estimated tax payments, you may have to pay a penalty for underpayment of estimated tax. Generally, most taxpayers will avoid this penalty if they owe less than $1,000 in tax after subtracting their withholdings and credits, or if they paid at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller.
ID, so if I understand that, as long as we pay similar income tax to 2015 I won't get penalized regardless of my capital gains, am I understanding that correctly? Unless major things change we'll pay more in earned income in 2016 by a couple thousand at least as earnings are going up around $20,000 just in wages, so I should be OK then?
If your AGI for 2015 was $150k or more ($75k if you are married filing separately) you need to pay 110% of your 2015 liability in equal quarterly estimates (or in withholding) in 2016 to avoid an underpayment penalty. Due dates are 4/15, 6/15, 9/15 and 1/15/17.
If your AGI for 2015 was $150k or more ($75k if you are married filing separately) you need to pay 110% of your 2015 liability in equal quarterly estimates (or in withholding) in 2016 to avoid an underpayment penalty. Due dates are 4/15, 6/15, 9/15 and 1/15/17.
I think the other caveat is if you don't have a liability at the end of the tax year either you can get away with it as well
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