Hi:
Last year, I got refund from Fed and State tax. That was a normal year.
This year is different. My company was sold in Sept and it is now a private company. All my previous company stocks are sold. My gain is huge. But I do not know how much the gain is since the calculation is complicated.
Do I need to pay additional tax by the end of the year so that there is no underpayment penalty?
I was told there are two rules:
- 90% of the amount of tax you will pay in total for the year; or
- 100% of the amount of tax you paid for the previous year.
So far, the Fed withhold is already more than what I paid for last year.
But my estimation for this year's tax will be at least 3-4 times of last years'.
Will I get underpayment penalty if I do not pay extra by the end of year?
Thanks