Do I have to pay estimated taxes on daytrading stock sales if I am employed as well?

Discussion in 'Taxes and Accounting' started by Steven W, Jul 2, 2019.

  1. Steven W

    Steven W

    I paid 34k in taxes last year. So far this year, I only paid around 11k in tax withholding through my current job unrelated to stocks and have already made more in half a year than I did for 2018 through stocks. I heard my w2 withholding if I make a huge lump sum will be able to get rid of the penalties for the underpayment for the 1st two quarters. Since I only have a month or so at my current job, my whole paycheck w2 withholding can cover the whole CA state estimated tax but not the federal since federal is much greater. Should I just put the whole amount towards CA state and avoid the 6% interest penalty for the state and pay the 6% for the federal? There is no way I can make 110% of last year's tax liability for federal but I will be able to for state is my reasoning. Any tips?
    #11     Jul 3, 2019
  2. Ryan81


    For Federal:
    If you paid 34K last year in taxes, then I think you'll meet the safe harbor if you have at least $37,400 withheld this year. If you already had 11K withheld, then you have the rest of 2019 to have them withhold 26,400 more (or about $4400 per month).

    It's already too late for the June 17th estimated payment.. so if it were me, I would make a huge estimated payment for the Sept 16th date, to more than get you over the safe harbor amount (when considering the combination for what will be included from your W-2 income too.)

    I don't live in California and am not familiar with their penalties -- but it might be worth your while to see which one penalizes you more for under-withholding -- and crank up your W-2/W-4 numbers for that one.
    #12     Jul 3, 2019
  3. Ryan81


    In another thread you created, you mentioned that you thought you would be getting fired from your job within the next month. That makes the W-2 withholding strategy moot at this point. The under-withholding penalties are probably almost irrelevant in the grand scheme of things if you are losing you job anyway. Might be a better idea to focus your efforts on finding another job?
    #13     Jul 3, 2019
  4. Sig


    This is correct, I've had most of my year's tax withholding held out of my Dec pay and avoided the quarterly payment penalties. Much easier to do when you own the business and can decide what to pay yourself every pay period!
    #14     Jul 6, 2019