How to Make Estimated Tax Payments on Capital Gains
Taxes aren't usually withheld from payments such as rental, self-employment, alimony and capital gains income. It may be necessary to pay an estimated amount of tax. If you're due a refund for the current year, or the amount you owe is less than a thousand, you don't need to make an estimated tax payment.
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Instructions
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Determine your tax amount based on the payments of the prior year. If your income is lower for the current year, your estimated tax payment should be based on 90 percent of your current liability.
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See if the numbers for the current year are significantly different. Round each number, and don't worry about the small changes.
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Figure up the differences between the prior and current years to estimate a larger or smaller tax obligation.
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Add the tax rates and determine the difference, which is the amount of your income tax. Add the capital gain tax rate and round up the amount.
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Pay your estimated tax early or set the amount aside and earn interest until it is due. The tax amount may also be paid out in quarterly amounts.
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Put your social security number on your check and the year and form for which it is to be applied.
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Tips & Warnings
You can avoid having to estimate your tax if you increase the amount of withholding from your current pay check.
Don't send your estimated tax payment with your 1040 form. The address is in the 1040 ES instructions.
