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Posted by removeps-groups@yahoo.com on June 29, 2008, 7:32 pm
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> > Since the taxes would not need to be paid until April of the
> > following year, wouldn't it make more tax sense to give the stock now
> > and the cash to pay income taxes the next year? Then you would get
> > another round of the exclusion.
>
> Yep, it sure would.
However, there would likely be penalties for paying tax late. That
is, tax on 12k of stock is about 1.8k at 15%, and if on April 15 of
next year you owe more than 1k there will likely be penalties for
paying tax late. To avoid the penalty you can make an estimated
payment (due dates are 4/15, 6/15, 9/15, 1/15) or equal estimated
estimated payments each of the 4 "quarters". It may also be possible
to avoid the penalty by taking advantage of prior year safe harbor,
increasing withholding at work, having other deductions such as
mortgage interest and IRA. In any case, the penalty is small --
probably under $100 here, but you'd have to check to be sure.
For gifts over 12k, any gift tax paid by the giver gets added in a
complicated manner to the cost basis of the stock, meaning that some
of that gift tax is recouped when you eventually sell.
There are also state tax issues to consider.
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Posted by Bill Brown on June 29, 2008, 9:39 pm
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On Jun 29, 7:32 pm, "removeps-gro...@yahoo.com" <removeps-
gro...@yahoo.com> wrote:
>
> > > Since the taxes would not need to be paid until April of the
> > > following year, wouldn't it make more tax sense to give the stock now
> > > and the cash to pay income taxes the next year? Then you would get
> > > another round of the exclusion.
>
> > Yep, it sure would.
>
> However, there would likely be penalties for paying tax late.
There are safe harbors. If the kid had zero tax liability in the prior
year, the penalty for underestimating taxes would be zero.
The maximum marginal federal tax on a $12,000 LTCG is $1,800. The
maximum marginal underestimating penaly would be about $50-$60.
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by removeps-groups@yahoo.com on June 30, 2008, 12:25 pm
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> > > > Since the taxes would not need to be paid until April of the
> > > > following year, wouldn't it make more tax sense to give the stock now
> > > > and the cash to pay income taxes the next year? Then you would get
> > > > another round of the exclusion.
BTW, to be clear taxes are only due if you sell the stock.
> The maximum marginal federal tax on a $12,000 LTCG is $1,800. The
> maximum marginal underestimating penaly would be about $50-$60.
Yeah. The fee a professional tax preparer might charge to prepare
form 2210 Schedule AI (which allows you to pay a different amount of
estimated tax each "quarter" because your income varies during the
year), would almost certainly be more than $50, or $100. The cost to
do it on your own through Turbotax would be less, but then there would
as in the other case be the added time, cost of additional paperwork
(because all your income has to be tracked by quarter).
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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