I am about to file a form 1040-ES to pay the estimated long-term capital gains taxes that I owe from the sale of a long-term real estate investment (vacant land). The sale took place in the fourth quarter of 2015 (after Sept. 15), so the taxes are due by January 15, 2016 unless I file my 2015 form 1040 by January 31. That much I know. I would like to make sure I am understanding the rest of the process correctly.---------->>>>correct; Making estimated tax payments allows you to avoid underpayment penalties.Yes you can send in an estimated payment for only that quarter, not the other quarters. For example, if you receive all the capital gains on oct 31, make your estimated tax payment on Jan 15.
As I understand it, the capital gains tax is calculated on the amount of the sales proceeds minus cost basis and closing costs. Example: If the land was sold for $400,000 and the cost basis and closing cost together were $70,000, then the amount from which the capital gains taxes are calculated would be $400,000 minus $70,000, which comes to $330,000. (Correct?)=======>>>>correct;
Since I am in the 28% tax bracket the applicable capital gains rate for 2015 will be 15%, so $49,500 is due in capital gains taxes. (Correct?)=====>>>>>no; say your taxable income is above 15% , then your capital gains rate is 15%.as, You have a $70K of long term capital gain and you are in 28% tax bracket, you pay $10.5K in capital gains tax ($70k X 15% = $10.5k). This amount is in addition to your tax on your ordinary / other income reported on your 1040.You basically need to report the gain on f8949, part 2 and Sch D line 20.
I am unclear, however, if I am also subject to the additional 3.8% medicare surtax? ==========>it depends ; if your marginal tax rate is 39.6%, then, your Tax rate on qualified dividends and long term capital gains is 20% NOT 15%; an additional 3.8% surtax applies to net investment income for taxpayers with AGI over $200K for single filers or $250K married filing jointly. also, your wage base for Medicare withholding remains unlimited ,tax rate of 1.45%, but healthcare reform legislation in 2013 increased Medicare payroll withholding by 0.9% to 2.35% for amounts over $200K for single filers or $250K for married filing jointly.
I ran the above scenario using a tax program and using my return information from 2014 (which is very close to what 2015 will be), and the amount of tax due comes closer to 18% which indicates to me that I am subject to the medicare surtax.==========>Ok .
I would appreciate some help with the following:
1. Am I calculating the taxable proceeds correctly by subtracting cost basis and fees from the amount I received at closing and applying 15% to that amount?==>As said above, you need to report your LTCG of $70K on 1040 line 13, 22 ,37, 38 as part of your income taxable toIRS.
2. Is the capital gains tax rate for 2015 15% for someone in the 28% tax bracket?===>Correct; it is 0% for a TP in lower than 25%.
3. Am I subject to the 3.8% surtax?=========>>>. As said above, it depends.