Most people think losses from last year can erase this year's tax bill — they can't. Tax years are hermetically sealed. If you sold a huge winner in 2016 and then watched your portfolio tank in 2017, those losses won't rewind the clock on what you owe. Brad and Jonathan break down this costly misconception and walk through the essential mechanics of capital gains, quarterly estimated payments, and filing extensions — especially critical if you're self-employed or running a small business.
Key Topics Discussed
Tax Deadline Approaching
Preparing for the April tax deadline and what to prioritize.
Understanding Capital Gains and Losses
Losses in one year cannot offset gains from a previous year. Each tax year stands alone.
Filing Extensions
How to file Form 4868 for an extension. Critical detail: the extension buys you time to file, not time to pay.
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Estimated Tax Payments
Quarterly estimated payments are required for self-employed individuals and small business owners. Strategies to avoid penalties.
Safe Harbor for Estimated Payments
Meeting safe harbor guidelines prevents underpayment penalties. Payment options and rules for high-income taxpayers.
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Key Quotes
- "Always save a portion of your gains for taxes."
- "A blessing can quickly turn into a curse if taxes aren't managed properly."
- "Avoid underpayment penalties: pay 90% of your current year's tax."
- "Don't let tax liabilities surprise you. Plan ahead."
- "Quarterly estimated payments are essential for small business owners."
Action Items
- Start setting aside funds for your taxes now.
- File for an extension using Form 4868 if needed.
- Make quarterly estimated tax payments to avoid penalties.
Resources
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- IRS Form 4868
- EFTPS (Electronic Federal Tax Payment System): www.eftps.gov
