paying tax on commodity gains

[Commodities]

What is the name of your state? Va.

I am estimating that I will owe around $7000 because of commodities gains. I do not pay estimated tax, but this year my tax bill is going to be about 35% higher than last year as long as the commodities dont go way down before the end of the year.

Can I just make a tax payment (in addition to my withholding at my full time job) before the end of the year to avoid paying penalties? Its hard with commodites to estimate what you may make or lose. They change so fast.

Thanks

 

[Snipes5]

If your large gain "posts" at the end of the year, you can avoid penalty by annualizing your income, provided your other withholding was sufficient for your other income. This is a complicated procedure done via form 2210. Best to have it done by a pro, or at the very least do it with a computer program.

Snipes

 

[abezon]

The easiest way to avoid any penalties is to pay in (via withholding or estimated payments) an amount equal to or greater than last year's "tax liability". Dig out last year's return & look for the line that states the total you are required to pay for the year. This will include income taxes, SE taxes, any penalites on early withdrawal of retirement savings, etc. Ignore the lines about how much you paid in or whether you got a refund or not.

If your total income tax before any payments were credited was $2,000, & you pay in $2,000 via payroll withholding, you have no penalties even if you owe $20,000, as long as you pay the remaining $20k by 4/15/2006.