I believe I understand the basics of the Safe Harbor Rule. Pay 90% of this year's tax or 100% (or 110% if income over 150K) of last year's tax. Here is where it is slightly murky. I know if you have a W2 job, and you underpaid severely the first couple of quarters, you can simply have a larger amount withheld to meet the 90% or 100 / 110% numbers above. Putting the W2 aside, as long as each of your 4 estimated payments meets the 90% 100 / 110% criteria quarter by quarter, you are safe. Is that correct? Here is an extreme example: You made 100K in 2022 and your tax liability was 20K. Now, in 2023, you start out making 4 equal payments of 5K which is 100% of last year's liability. In February of 2023 you start trading Bitcoin and by May, you have made 500K! (This is not my story, just a hypothetical example.) The luck of the Irish is upon you and by the end of 2023, you have made over 5 million trading Bitcoin! Your tax liability will likely approach 2 million, yet you have only made 3 equal installments of 5K, and in January, you make the last installment of 5K, planning to square things up in April. Are you "safe?"
%% NO not safe @ all in that example with bitcon+ now that is disclosed[required ] on your tax return. But even more important, no such thing as luck. But since you used the word luck; if you want bad ''luck'' to the maX under pay your taxes.. Peter Lynch did buy a home in Ireland, good green LOL
Microsoft Copilot says yes, the safe harbor rule applies. Your tax software, accountant, or the IRS might say otherwise.
%% ALSO consider this, not just are you ''safe ?''. I bought a lot of books thru AMZN+ J Bozos paid no IRS taxes some years. BUT 2014-2018 he paid 0.98 % rate , so you or any\ have factor in IRS audits on aggressive tax plans. [Forbes magazine ,Sarah Hanson 2021 article] Crypto disclosure is now required on US returns. So while many honest people like low tax rates, + low tax states; realize many things, trigger an audit. Most IRS audits get more taxes also. IF you gained more than$ 13.6 million your estate may have to pay no Federal tax, but I'm not a CPA. So '' are you safe thru an audit??''