Trying to figure out my estimated taxes for 2020 is driving me insane!

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VartAndelay
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Joined: Tue Mar 03, 2015 11:29 pm

Trying to figure out my estimated taxes for 2020 is driving me insane!

Post by VartAndelay »

I recently incurred large capital gains and have been trying to figure out about how much federal tax I'll owe for 2020 (no state tax). Here is my situation, and these numbers are final for 2020 so I can use them for the entire year. I will earn no more wages.

28 years old
single
no dependent
not anyone else's dependent

wages: $165k
Short term capital gains: $269k - $85k carryover = $184k
long term capital gains: $376k - $12k carryover = $364k

I'll be taking the $12.4k standard deduction.

Using this I calculated I will owe about $180k for 2020 taxes, so that's what I paid. However then I decided to double check my work by using some online calculators for 2020, and this has been a nightmare. Using 5 different calculators, I get 5 different results. 1 says I'll owe $150k. Another says $220k. 1 says I'll be hit by the Alternative Minimum Tax and owe another $14k for that. The others do not say I will be hit by the AMT.

Does anyone know the right result? How much would I actually owe, and will I be affected by the AMT or not?
PaunchyPirate
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Re: Trying to figure out my estimated taxes for 2020 is driving me insane!

Post by PaunchyPirate »

It might be time to actually buy a 2019 tax software like TurboTax and pretend you are filing a return. It’s probably the best estimate for how 2020 will calculate out. I always use the previous year’s software to estimate and do “what if” scenarios for the coming year. It allows you to see the forms with all the numbers so you can follow the calculations.
Affable at 50
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Re: Trying to figure out my estimated taxes for 2020 is driving me insane!

Post by Affable at 50 »

I agree with PaunchyPirate. The 2019 version of TurboTax, TaxAct, or similar professional software will allow you to enter the data as if the income was earned in 2019. This is the best way to get a reasonable estimate.

You’ll have to enter the w-2 income, schedule B and D information as best you can.
kaneohe
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Re: Trying to figure out my estimated taxes for 2020 is driving me insane!

Post by kaneohe »

I like this one https://www.mortgagecalculator.org/calc ... ulator.php

Using your numbers, AGI = 713K, std ded 12.4K.......tax 160.163K , NIIT=19.494K, total=179.657K
This estimate is for 2020, not 2019. (redid......couldn't read my own writing). Basically agrees w/
DrCheese who did it by hand?

when I've used this calculator in the past, it got the same result as Taxslayer software .

the 2 calculations below used wrong input originally(304K instead of 364K)...now corrected
HRBlock Tax Calculator total tax estimate 180.480K (not broken down). This estimate is for 2019.

Taxcaster Tax Calculator total tax estimate 180.481K (160.987K regular; 19.494K other, prob NIIT)
This estimate for 2019.

both 2019 estimates agree.....2 different calculators.
Last edited by kaneohe on Mon Sep 21, 2020 8:29 pm, edited 7 times in total.
DrCheese
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Re: Trying to figure out my estimated taxes for 2020 is driving me insane!

Post by DrCheese »

I will take a shot at it:

165k + 184k - 12,400 = 336,600. This is taxed at ordinary income tax rates. Tax is $92,605

Long Term capital gains is taxed at 15% up to 441,450 then at 20%. Thus $104,850 is taxed at 15% (15,727.50). 259,150 at 20% (51,830)

So far the tax is 160,162.50.

Now you have to pay 3.8% Net Investment Income Tax over $200,000 or $19,494

Your total tax is $179,656.50

I will figure out the AMT if any later.
Last edited by DrCheese on Tue Sep 22, 2020 10:02 am, edited 1 time in total.
kaneohe
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Re: Trying to figure out my estimated taxes for 2020 is driving me insane!

Post by kaneohe »

which 5 calculators did you use?
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Eagle33
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Re: Trying to figure out my estimated taxes for 2020 is driving me insane!

Post by Eagle33 »

If you have Excel, you can download Excel1040 for free. I would suggest downloading both 2019 and 202. See if you can duplicate your 2019 tax return first, then try 2020.
Rocket science is not “rocket science” to a rocket scientist, just as personal finance is not “rocket science” to a Boglehead.
Topic Author
VartAndelay
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Re: Trying to figure out my estimated taxes for 2020 is driving me insane!

Post by VartAndelay »

Thank you all so much for the help. I am still having trouble trying to figure out whether or not I need to pay AMT though.
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Eagle33
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Re: Trying to figure out my estimated taxes for 2020 is driving me insane!

Post by Eagle33 »

VartAndelay wrote: Mon Sep 21, 2020 10:14 pm Thank you all so much for the help. I am still having trouble trying to figure out whether or not I need to pay AMT though.
See Form 6251 in Excel1040 spreadsheet.
Rocket science is not “rocket science” to a rocket scientist, just as personal finance is not “rocket science” to a Boglehead.
boomer_techie
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Re: Trying to figure out my estimated taxes for 2020 is driving me insane!

Post by boomer_techie »

kaneohe wrote: Mon Sep 21, 2020 7:33 pm Using your numbers, AGI = 713K, std ded 12.4K.......tax 160.163K , NIIT=19.494K, total=179.657K
This estimate is for 2020, not 2019. (redid......couldn't read my own writing). Basically agrees w/
DrCheese who did it by hand?
I plugged the OP's numbers into my spreadsheet and came up with these same numbers. (Well, actually, 50 cents less.)

Regular tax (from QDCG worksheet): $160,162.50
AMT: $154,529.50 (less than regular tax, so no AMT)
NIIT: 19,494.00

Total: $179,656.50

If the OP posts what tax quarter or month the income arrived, I could plug those dates into my spreadsheet and calculate the required estimated payments. (Perhaps the OP has already met a safe harbor via withholding and doesn't need to be making estimated payments.)

Edited to add AMT breakdown:
$86,972.00 is from applying the AMT brackets to $324,750.00 of income
$15,727.50 is 15% of $104,850.00
$51,830.00 is 20% of $259,150.00

Notes:
$104,850.00 + $259,150.00 = $364,000.00 (the LTCG)
carolinaman
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Re: Trying to figure out my estimated taxes for 2020 is driving me insane!

Post by carolinaman »

PaunchyPirate wrote: Mon Sep 21, 2020 7:11 pm It might be time to actually buy a 2019 tax software like TurboTax and pretend you are filing a return. It’s probably the best estimate for how 2020 will calculate out. I always use the previous year’s software to estimate and do “what if” scenarios for the coming year. It allows you to see the forms with all the numbers so you can follow the calculations.
+1. This is what I did. I already had desktop version of TT 2019 and used it for estimated taxes. There will be a slight variance due to inflation increases for tax tables and standard deduction, etc. But TT should be accurate in treating your tax liability, including AMT and NIIT. Much more robust than most calculators.
kaneohe
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Re: Trying to figure out my estimated taxes for 2020 is driving me insane!

Post by kaneohe »

VartAndelay wrote: Mon Sep 21, 2020 10:14 pm Thank you all so much for the help. I am still having trouble trying to figure out whether or not I need to pay AMT though.
the mortgage calculator that I used did not show any AMT tax. However if you increase
LTCG to 445K, AMT = $36.
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sperry8
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Re: Trying to figure out my estimated taxes for 2020 is driving me insane!

Post by sperry8 »

I just pay 10% over last year which allows you to not have underpayment penalties. Then you can just pay the difference (or receive a refund) next year, without penalty.
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FactualFran
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Re: Trying to figure out my estimated taxes for 2020 is driving me insane!

Post by FactualFran »

For what it is worth, I calculate about the same $180k reported in the opening post. The breakdown is

$92.6k on ordinary income (including short-term capital gain)
$67.6k on long-term capital gain
$19.5k Net Investment Income Tax

I don't have details about the AMT for 2020. Based on the AMT for a previous year, in this case the tax amount calculated by the AMT does not exceed the result of the regular tax calculation.
boomer_techie
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Re: Trying to figure out my estimated taxes for 2020 is driving me insane!

Post by boomer_techie »

kaneohe wrote: Tue Sep 22, 2020 9:53 am the mortgage calculator that I used did not show any AMT tax. However if you increase
LTCG to 445K, AMT = $36.
Um, yup! This is caused by an AMT exemption amount that phases out with income over $518,400. Interestingly, adding the extra $81K as STCG or wage income does not result in AMT: The extra income in the 37% bracket beats the 28% AMT rate.
BogleDan
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Re: Trying to figure out my estimated taxes for 2020 is driving me insane!

Post by BogleDan »

sperry8 wrote: Tue Sep 22, 2020 10:09 am I just pay 10% over last year which allows you to not have underpayment penalties. Then you can just pay the difference (or receive a refund) next year, without penalty.
This is the answer, if all you are worried about is facing penalties. Pay 110% of last year's tax amount and you will be covered. You just might owe some more come next April.
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grabiner
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Re: Trying to figure out my estimated taxes for 2020 is driving me insane!

Post by grabiner »

boomer_techie wrote: Tue Sep 22, 2020 5:35 pm
kaneohe wrote: Tue Sep 22, 2020 9:53 am the mortgage calculator that I used did not show any AMT tax. However if you increase
LTCG to 445K, AMT = $36.
Um, yup! This is caused by an AMT exemption amount that phases out with income over $518,400. Interestingly, adding the extra $81K as STCG or wage income does not result in AMT: The extra income in the 37% bracket beats the 28% AMT rate.
The phase-out is a 7% increase in marginal tax. Thus, in the phase-out, long-term gains are taxed at 27% under AMT and 20% under regular tax, or 22% versus 15%. Short-term gains are taxed at 35% in the AMT phase-out, which is close to the regular tax rate.
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celia
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Re: Trying to figure out my estimated taxes for 2020 is driving me insane!

Post by celia »

VartAndelay wrote: Mon Sep 21, 2020 7:01 pm Short term capital gains: $269k - $85k carryover = $184k
long term capital gains: $376k - $12k carryover = $364k
What do you mean by "carryover"?

Your gains are the (selling price - selling commissions) - (purchase price + purchase commission)
Tingting1013
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Re: Trying to figure out my estimated taxes for 2020 is driving me insane!

Post by Tingting1013 »

celia wrote: Tue Sep 22, 2020 8:19 pm
VartAndelay wrote: Mon Sep 21, 2020 7:01 pm Short term capital gains: $269k - $85k carryover = $184k
long term capital gains: $376k - $12k carryover = $364k
What do you mean by "carryover"?

Your gains are the (selling price - selling commissions) - (purchase price + purchase commission)
Losses carried over from prior years
Gill
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Re: Trying to figure out my estimated taxes for 2020 is driving me insane!

Post by Gill »

celia wrote: Tue Sep 22, 2020 8:19 pm
VartAndelay wrote: Mon Sep 21, 2020 7:01 pm Short term capital gains: $269k - $85k carryover = $184k
long term capital gains: $376k - $12k carryover = $364k
What do you mean by "carryover"?

Your gains are the (selling price - selling commissions) - (purchase price + purchase commission)
Celia, OP shows loss carryovers in his post.
Gill
Cost basis is redundant. One has a basis in an investment | One advises and gives advice | One should follow the principle of investing one's principal
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celia
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Re: Trying to figure out my estimated taxes for 2020 is driving me insane!

Post by celia »

:oops: Why didn't I think of that?
Dottie57
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Re: Trying to figure out my estimated taxes for 2020 is driving me insane!

Post by Dottie57 »

Taxcaster app is good on my iPad. It has done a decent job of estimating taxes for me. You need to input decent data however.
bbrock
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Re: Trying to figure out my estimated taxes for 2020 is driving me insane!

Post by bbrock »

kaneohe wrote: Mon Sep 21, 2020 7:33 pm I like this one https://www.mortgagecalculator.org/calc ... ulator.php

Using your numbers, AGI = 713K, std ded 12.4K.......tax 160.163K , NIIT=19.494K, total=179.657K
This estimate is for 2020, not 2019. (redid......couldn't read my own writing). Basically agrees w/
DrCheese who did it by hand?

when I've used this calculator in the past, it got the same result as Taxslayer software .

the 2 calculations below used wrong input originally(304K instead of 364K)...now corrected
HRBlock Tax Calculator total tax estimate 180.480K (not broken down). This estimate is for 2019.

Taxcaster Tax Calculator total tax estimate 180.481K (160.987K regular; 19.494K other, prob NIIT)
This estimate for 2019.

both 2019 estimates agree.....2 different calculators.
Just finished my calculations, tax planning, and 2021 tax forecasting. That's a solid recommendation. Thanks for sharing that link Kaneohe!

BTW, kind of related, I found that the IRS W-4 calculator was much more accurate than that provided by TurboTax. Had I stuck with TurboTax's recommendation per their W-4 calc., it would have been way off. I estimate I overpaid ~$500. That's doable.
bbrock
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