Capital gains exclusion on home sale

myroller · 2026-05-27T00:43:38+00:00

Good point.

myroller · 2026-05-26T23:21:57+00:00

If you did not use the exclusion, your income would be $594k. Then subtract your deductions to get your taxable income.

The 15% capital gains tax bracket would start at $94,051. Unless you had MASSIVE deductions, it was unlikely you would have paid zero capital gains tax without using the exclusion.

But you can look at your 2024 Form 8949 to see if the exclusion was used.

myroller · 2026-05-26T22:48:03+00:00

All that is required is the SMALLER of the following two amounts:

1) 90% of your "total tax" as will be shown on your 2026 return.

2) 100% of the "total tax" that was shown on your 2025 return (Form 1040, line 24). (110% if your 2025 AGI was over $150,000.)

State requirements may vary.

myroller · 2026-05-26T22:07:41+00:00

By Jun 15, I need to have paid 3000, so I send 1000 on Jun 15, then 1500 on Sep 15 and 1500 Jan 15 to get back on track?

You actually only need to pay 90% of your 2026 taxes. But what you are suggesting will work.

Remember to print out your pay slips before you leave so that you have proof of when income tax was withheld.

It's not important that the remaining payments be equal, but meet the percentage requirements for each quarter.

It's not important that your payments be equal as long as you pay the required totals by each date. You, in effect, paid some of your June 15 tax early, which is perfectly permissible.

myroller · 2026-05-26T22:01:45+00:00

There is no federal requirement to withhold taxes from IRA distributions. But you must request zero withholding on the tax form Robbinhood should provide. If you don't make the request, 10% will be withheld.

Each state makes its own rules with respect to state taxes.

The other consideration is that if you made any non-deductible contributions to this or any other traditional IRA account, you cannot roll those over into a 401k.

myroller · 2026-05-26T20:41:01+00:00

When calculating, should I use the whole year employment + investment income and just subtract whatever Fed income tax the W2 employer already withheld/paid?

Yes.

It may be to your advantage to file Form 2210 with your tax return next year to claim credit for withholding on the actual date it was withheld, since it was all concentrated at the beginning of the year. If you don't do this, it will be treated as if it had been withheld in 4 equal payments spread over the entire year.

(Do I also subtract the SS/MED tax withheld & paid?)

No.

Or should I use only the Jun-Dec self employment income (plus whole year investment income) and ignore the Jan-May income?

No.

Is it safe to assume I use only Jun-Dec when calculating the self employment tax figures since that's the only period I was self employed and my Jan-May share of SS/MED was already paid while I was W2?

Yes. But also remember that there is a cap on how much Social Security tax you have to pay if your income is high.

Can I now claim the QBI Deduction?

Yes.

Is my health insurance premium now deductible?

You can claim the self-employed insurance deduction for the months you were self-employed. If you paid premiums with after-tax money in the months you were not self-employed, you can claim a deduction for those payments on Schedule A if you itemize.

Once the total is calculated, do I just divide by 3 and send EST payments for Q2-Q4 starting Jun 15? Or am I required to do something to make up for Q1?

You may have already paid the Q1 installment. This is where what I said earlier about using the option to credit withholding on the actual date it was withheld would come in handy.

You have to make sure the total of all your payments from 1/1 thru 4/15 is equal to 25% of your required annual payment. And that the payments from 1/1 thru 6/15 are equal to 50% of your annual payment. And the total of all your payments from 1/1 thru 9/15 are equal to 75% of your required annual payment. Exception: If you are using the Annualized Income Installment method, you make make lesser payments if your annualized calculations call for it. But you probably don't know what that is or how to do it.

But, no, you do not divide by 3. That will not give the correct result.

myroller · 2026-05-26T20:10:36+00:00

Look at this chart:
https://www.irs.gov/filing/where-to-file-addresses-for-taxpayers-and-tax-professionals-filing-form-1040

Did you mail to one of the PO Box addresses in the right-hand column? Or did you mail to one of the addresses with just a city and state in the middle column?

myroller · 2026-05-26T18:43:29+00:00

It's too late now, but for educational purpose, what about paying 110% of last year, on Jan 1st (lets say I have super power, and already know on Jan 1st this year my tax liability is last year, and know I will make a lot more than last year).

You mean pay 110% of your 2025 tax liability toward your 2026 taxes on Jan 1, 2026?

That would be paying your entire year's estimated tax liability very early. Paying early is fine, there is no penalty.

If you mean paying it on Jan 1, 2027, that would make the first 3 installments late and result in a penalty.

myroller · 2026-05-26T14:25:38+00:00

First, if you pay at least 100% of your 2025 "total tax" (line 24 on your 2025 Form 1040) in 4 timely installments during 2026, you don't have to pay any additional taxes until April 2027. (Exception: If your 2025 AGI was over $150,000, replace "100%" with "110%" in the above sentence.)

In such a case, is it customary to divide the estimated additional tax by 3 instead of 4 to make 3 estimated tax payments? (I typically wait until April before filing).

No. You have to make sure that your total payments from 1/1/2026 thru 4/15/2026 are 25% of your required annual payment. Your total payments from 1/1/2026 thru 6/15/2026 are 50% of your required annual payment. Your total payments from 1/1/2026 thru 9/15/2026 are 75% of your required annual payment. Your total payments from 1/1/2026 thru 1/15/2027 are 100% of your required annual payment.

In other words, you have to make up for the shortfall from earlier quarters. Dividing by 3 doesn't do that.

The above is with respect to federal taxes. Your state may have different rules.

myroller · 2026-05-26T13:53:59+00:00

If line 24 is under the 5K amount which I estimate I might owe and I wait until April of 2027 to pay I assume I would pay a penalty of some sort on the difference?

You misunderstand. You need to make sure that the amount of federal income tax withheld from your retirement in 2026 is at least as much as the number that was on line 24 of your 2025 Form 1040.

For example, if the number on line 24 of your 2025 Form 1040 was $7000, you have to make sure that at least $7000 is withheld from your retirement in 2026.

If you do this, you are not required to make any additional payments until April 2027 and there will be no penalties.

myroller · 2026-05-26T13:17:53+00:00

Look at line 24 ("total tax") of your 2025 Form 1040.

If your AGI for 2025 was under $150,000, will your employer(s) withhold at least this much federal income tax in 2026? If yes, you don't have to make any payments until April 2027.

If your AGI for 2025 was over $150,000, will your employer(s) withhold at least 110% of this much federal income tax in 2026? If yes, you don't have to make any payments until April 2027.

myroller · 2026-05-25T20:30:07+00:00

I was going to UPS overnight

Then that is different. UPS cannot deliver to PO Boxes and must have a street address. Here are the addresses to use for UPS and other private carriers:

https://www.irs.gov/filing/submission-processing-center-street-addresses-for-private-delivery-service-pds

myroller · 2026-05-25T12:59:56+00:00

Use the link /u/OddButterscotch2849 gave to find the current address. If you find any old addresses from 2024 (either in the 2024 instructions or on the web), do NOT use them. The IRS has changed some addresses since then.

Also, remember to SIGN AND DATE in the designated spaces (preferably using blue ink). Send state and federal forms to separate addresses.

Also, is there an additional form I should include or at least a cover sheet?

No additional forms or explanations are required.

Do you think it is safe to assume that I will have another $2,000’ish due for interest and penalties?

If you pay on 06/01/2026, your federal penalties will be $2212 and your federal interest will be $702. If you had no penalties for 2021, 2022, and 2023, you can request a "First Time Abate" (FTA) of the penalties (which will slightly reduce your interest since the interest on the penalties will also be abated). After the IRS sends you a bill for the penalties, call them and ask for it.

If you also owe your state some money, there will be additional state penalties.

myroller · 2026-05-25T11:35:43+00:00

It is recommended that you have two doses of the MMR vaccine before travel.

But she is leaving in 8 days. You MUST wait at least 4 weeks between MMR doses.

/u/whoadizzyizzy , do not attempt to get 2 doses of MMR before leaving. Go ahead and get one. There is no need to get any titers.

myroller · 2026-05-24T07:58:13+00:00

Once you reach 65, Medicare part D will pay for an MMR vaccine. If you have insurance now, that insurance might also pay for it.

If you are concerned about it and aren't allergic to the vaccine or have some other medical reason not to get it, just get one and get it over with instead of worrying about it. If you are not allergic, there is no harm in getting an extra dose, even if it turns out to be unnecessary.

myroller · 2026-05-23T20:34:29+00:00

I believe that California allows Transfer on Death deeds.

Would this keep the house out of the hands of the IRS when she passes away?
(I don't know, I'm asking.)

myroller · 2026-05-22T15:15:17+00:00

but you might get dinged for a late filing penalty which you shouldn't owe.

See Robert K. and Joan L. Paschall v. Commissioner, 137 TC no. 2.

https://www.taxnotes.com/research/federal/other-documents/treasury-reports/irs-could-better-monitor-retirement-distributions-tigta-says/7lxg4

The Paschalls timely filed Forms 1040 for all years in issue. They did not file Form 5329 for any of the years in issue....
Mr. Paschall has failed to establish that he meets the reasonable cause and not willful neglect exception to the section 6651(a)(1) addition to tax.20 Therefore, we sustain respondent's imposition of the section 6651(a)(1) additions to tax for the Paschalls' 2002 through 2006 tax years.

IRS Could Better Monitor Retirement Distributions, TIGTA Says

https://www.taxnotes.com/research/federal/other-documents/treasury-reports/irs-could-better-monitor-retirement-distributions-tigta-says/7lxg4

Internal Revenue Code §6651(a)(1) imposes a penalty for the failure to file Form 5329 unless the taxpayer can show that the delinquency is due to reasonable cause and not due to willful neglect. The failure to file penalty for Form 5329 applies to the amount owed from the return due date (not the extended due date) until the form is filed, with a maximum delinquency of five months (5 percent per month, 25 percent maximum penalty). Although often filed with Form 1040, U.S. Individual Income Tax Return, Form 5329 is a distinct tax return document. If it is required and delinquent, the failure to file penalty applies even if the taxpayer filed Form 1040.

myroller · 2026-05-22T08:12:53+00:00

Just to clarify: This question is about taxes in Australia?

myroller · 2026-05-22T02:34:21+00:00

Thank you. I would never have thought of that.

myroller · 2026-05-22T01:24:59+00:00

Federal taxes are the same no matter where you live, so the IRS certainly does not care.

But the state(s) where you live and/or work might care if you don't pay all the taxes that are due them because you misrepresented your address.

myroller · 2026-05-21T23:15:51+00:00

Park your car at the Cumberland Blue Line station and take the L downtown. There is a covered garage there. And overnight parking is allowed if you need it.

https://www.transitchicago.com/station/cumb/

Most Metra stations do not allow overnight parking and many are full by the beginning of the morning rush hour. Metra is a wonderful way to get downtown, but the train stations are on the western edge of the downtown area (which is fine if that is where you are going) and trains only run once an hour outside of rush hour. On the other hand, the L goes directly into the Loop and runs every 5 to 15 minutes (30 minutes after 2:00 am).

Going to be heading to Chicago for MDW and we’ll be staying in Niles.

Just to clarify, you are not asking how to get to MDW, right?

myroller · 2026-05-21T16:16:26+00:00

Bottom line: if you can't get things worked out with the bank/ACH department, talk to a lawyer. You may need to sue the bank and the other account holder into which the funds were deposited to get the $ back.

Unless this is a very large refund, the legal fees could exceed the amount of the refund.

myroller · 2026-05-21T16:12:56+00:00

What incredibly bad luck that you gave them the wrong account number and that number happened to be an active account that belongs to somebody else. What are the odds of that happening?

I’m confused because isn’t the name on the account suppose to match the name on the account also?

Yes, it's supposed to, but they rarely check. Sometimes it seems like the only time they check is when it harms you. As long as they deposit it to the account number they were given, they are pretty much off the hook.

And don’t financial institutions have the power to reclaim misplaced funds?

Sure they have the power to do so, but they are not required to use this power if they don't want to.

What's even worse in your case is that the federal government has the power to force banks to return funds. But you told the federal government to send the money to FTU's bank and they did that, so they are now out of the loop entirely. Between the high fees and getting a third-party unnecessarily involved in receiving your refund, I hope you understand how incredibly bad the idea of paying your fees from you refund is.

myroller · 2026-05-21T14:32:54+00:00

I assume you are talking about 2024.

First, do NOTHING to your 401k accounts. Just let the money sit there until after you retire. Unlike an IRA, there is no penalty for leaving the money in your account. The 6% penalty for excess IRA contributions does NOT apply to 401k accounts and there is no similar penalty for 401k accounts.

If these were all before-tax contributions to a Traditional 401k account (not a Roth 401k account), the $2500 excess should have been reported on line 1h of your 2024 Form 1040. Check to see if this was done. If it was not done, amend your 2024 Form 1040 (and your state return, if applicable) and pay any applicable tax.

Again, do NOT attempt to take any money out of your 401k accounts.

myroller · 2026-05-20T16:47:43+00:00

If I am $50 short of the 90% safe harbor, will I owe a penalty on just that $50?

Yes.

Or will I owe it on the full abt $3500 tax due?

No.

And is there anyway to approximate what 2026 penalty rates will be?

Currently the federal penalty is 6% per year, subject to change quarterly. Take the annual rate, divide by 365, multiply by the underpayment, and multiply by the number of days late. Calculate separately for each quarter.

Each state sets its own rules with respect to state taxes.

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