Both equity and real estate investors have experienced significant gains in recent years. While realizing profits from stocks or real estate can be gratifying, it also entails the responsibility of paying capital gains tax on the appreciated value of the asset upon sale. To prepare for this tax obligation, it’s advisable to estimate the anticipated tax liability associated with the sale and make timely estimated tax payments to the IRS throughout the year. The tax owed is calculated based on the profit generated from the sale, taking into account the selling price minus the initial investment, commissions, and- fees.
Failure to meet the IRS’s requirements for estimated tax payments may result in underpayment penalties. Seeking guidance from a financial planner or accountant can ensure accuracy in calculating and paying these taxes. In essence, proactive tax planning and collaboration with
financial experts are essential for effectively managing tax liabilities arising from investment gains.
Henry Perez, E.A. (Enrolled Agent), is a federally-authorized tax advisor and practitioner empowered by the U.S. Department of the Treasury. He represents taxpayers before the Internal Revenue Service (IRS). He can be contacted at (760) 772-2007.
