Made $70k from short term capital gains as a student, do I need to pay estimated taxes?

So if I'm understanding correctly, because my tax liability last year was $0, I technically don't need to make estimated payments to avoid the penalty? But I'll still owe a bunch when I file my taxes? Is there any benefit to making estimated payments now anyway instead of just paying it all when I file?

That's exactly right - if your prior year tax liability was truly $0, then technically you wouldn't need to make estimated payments to avoid the underpayment penalty under the safe harbor rule. There can be benefits to making estimated payments now rather than waiting. It helps you avoid a large lump sum payment at tax time, which can be a financial shock. Also, if your situation doesn't actually qualify for the safe harbor (for example, if you had some tax liability last year that you're not accounting for), making payments now helps reduce any potential penalties. Plus, getting ahead of your tax obligations often provides peace of mind.

Does it work for more complicated situations? I've got capital gains but also some rental property losses I'm trying to figure out how to handle with estimated taxes.

I'm skeptical about using AI for tax advice... How accurate is it really? Did you double check the information with an actual tax professional?

It handles complex scenarios quite well. For your situation with rental property losses offsetting capital gains, it would analyze how those interact under current tax rules and guide you on the correct estimated payment calculations. Regarding accuracy, I was skeptical too at first. The tool cites specific IRS regulations and publications for every piece of advice it gives. I actually did verify some of the trickier parts with a CPA friend who confirmed it was spot on. What impressed me was that it explained the reasoning behind the advice rather than just giving generic answers.

How does this actually work? Do they just call the IRS for you? I don't understand how they can get through faster than I can.

This sounds like a scam. The IRS doesn't let third parties hold your place in line. Plus why would you pay for something you can do yourself for free?

They don't call the IRS for you - they use a system that navigates the IRS phone tree and waits on hold in your place. When they reach a human agent, they call you and connect you directly to that agent. You're the one who actually speaks with the IRS. Yes, you can absolutely call the IRS yourself for free, but if you've tried recently, you know it can take hours of waiting on hold, and often you get disconnected. I calculated that my time was worth more than sitting on hold for 3+ hours, possibly multiple times if I got disconnected. It's basically like paying someone to stand in a physical line for you.

Thanks for the heads up. I definitely need to start setting money aside. Do you know if the internship income would push me into a higher bracket for the capital gains tax? And did you end up making estimated payments or did you just pay it all when you filed?

Your internship income will stack with your capital gains and potentially push at least some of your gains into a higher tax bracket. Short-term capital gains are taxed as ordinary income, so they're added on top of your wages and other income. I didn't know about the safe harbor rule when I was in your position, so I panicked and made an estimated payment. In retrospect, I probably didn't need to because my previous year's tax liability was very low, but it did make the final bill at tax time less painful to handle all at once.

TurboTax has a section specifically for estimated payments you've already made. It's under "Federal Taxes" → "Deductions & Credits" → "I'll choose what I work on" → "Estimates and Other Taxes Paid." It took me forever to find it too!

This is so important! I made the mistake of not properly tracking my crypto transactions when I had similar gains. Make sure you have records of the date you bought, the date you sold, the purchase price, and the sale price for every transaction. If you used multiple exchanges, you'll need to gather data from all of them. There are tools like Koinly or CoinTracker that can help aggregate everything, but the key is being thorough with your record keeping from the start.