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I purchased a fixer-upper home in April 2013 and closed on the sale in July for a $50,000 profit. I know I will owe more on my 2013 taxes than I did in 2012 (my regular income from my FT job will be about the same in 2013 as it was in 2012). Will I have an underpayment penalty on my 2013 taxes? Or, since I will pay as much in 2013 from withholding as I owed in 2012, will there be no underpayment penalty?


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The BIDaWIZ Team's Answer:

If you pay 100% of your total tax liability from the prior year (not just withholding), then you can avoid an underpayment penalty. Please reference IRS publication 505. Please note there may be Minnesota state tax requirements to consider as well which we can look into for you.

The BIDaWIZ Team

 

 

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