Navigating Tax Planning When Your Inheritance and Investment Income is More than Your Annual Salary

When your financial planner and accountant don’t set you up for estimated taxes

If you’re earning solid money through investments — whether that’s stock market gains, dividends, real estate, or other assets — but your salary isn’t high enough to cover the taxes on those gains, this one’s for you.

Because let’s be honest: your financial planner might be great at portfolio management, and your accountant might file things on time — but if you’re still stuck with a surprise five-figure tax bill every April, there’s a bigger planning problem happening. And it’s not your fault.

💡 What Are Estimated Taxes & Why Should You Care?
The U.S. tax system operates on a pay-as-you-go model. That means if you're making money — whether it’s through your 9-5 or your investments — the government wants a cut throughout the year, not just in April.

When you’re a W-2 employee, your employer handles this. But if your income comes from capital gains, dividends, K-1 distributions, or selling assets — and nobody is automatically withholding taxes — you are responsible for making quarterly estimated payments.

Otherwise, you could get hit with penalties plus interest (which can be 7-8%!). Yes, even if you’re working with a financial planner and CPA.

👉 Quick math: Think about it this way — if you make $200k from investments this year and nobody sets aside 20–30% for taxes, you could owe $40–60k at tax time. That’s a big check if your day job pays $60k and your monthly budget doesn’t account for it.

✅ Who Needs to Pay Estimated Taxes?
If any of this sounds like you, keep reading:

• Your investment income is higher than your salary
• You made large capital gains this year
• You have passive income, rental income, or side business income with no tax withholding
• You expect to owe more than $1,000 in federal taxes this year
  

Most people don’t realize they need to pay as they earn. But the IRS does — and they charge for it when you miss the memo.

📆 Quarterly Due Dates to Know
Estimated tax payments are due four times a year:

• April 15 (for income earned Jan–Mar)
• June 15 (for April–May)
• September 15 (for June–Aug)
• January 15 of the following year (for Sept–Dec)

Nope, it’s not evenly spaced. No, we don’t know why. Just mark your calendar.

🧾 What Happens If You Don’t Pay Throughout the Year?

• You’ll owe a large lump sum come tax time
• You’ll be charged penalties and interest (7-8%)
• If this happens every year, it gets more expensive and frustrating over time

Here’s the kicker: the IRS doesn’t expect you to predict your income with 100% accuracy. That’s why they created the Safe Harbor Rule — it’s how you avoid penalties even if you underpay.

You’re typically safe from underpayment penalties if you pay either:

• 90% of the taxes you’ll owe this year, or
• 100% of what you owed the previous year (this increases to 110% if your adjusted gross income (AGI) was over $150,000 — or $75,000 if married filing separately)

📚 Source: IRS Topic No. 306 — Penalty for Underpayment of Estimated Tax

So if you know last year’s tax bill was $25,000, aim to pay at least $25k this year — broken into four estimated payments — and you’ll likely avoid any penalties.

🛠️ How to Estimate and Pay (Even When Your Income Isn’t Consistent)
Here’s how to figure out what you need to pay:

1. Add up your projected investment and salary income
2. Subtract out any deductible expenses
3. Estimate your tax liability with your CPA (or use a tax calculator)
4. Divide that number by 4
5. Make quarterly payments on time

Example:
Let’s say your salary is $80k and your investments brought in $150k. You have no tax withholding on that $150k, and your estimated tax rate is 30%. You’re on the hook for $45k in taxes. That’s $11,250 per quarter.

Not planning for this can wipe out your cash reserves, force you to sell off investments early, or land you back in debt.

✨ Here’s the Bottom Line
You’re not doing anything wrong by building wealth through investments. That’s the goal.

But if your monthly income doesn’t cover your annual tax obligations, and your financial team isn’t helping you plan for those big swings, it’s time to change the system — not just react to the consequences.

✅ Start by saving 20–30% of your investment income in a high-yield savings account
✅ Ask your CPA to help you calculate your Safe Harbor number
✅ Build a finance team that works together — not in silos
✅ Stop relying on salary math to solve investment problems

As financial coaches, we act as the connective tissue between our clients’ accountant and financial planner, ensuring that their financial strategy is cohesive, actionable, and that everyone is on the same page, working together to get you to your goals. We do this through: 

• Facilitating clear communication: We ensure that your accountant and financial planner are on the same page, promoting a unified approach to your financial goals.​ 
• Translating financial jargon: We break down complex financial terms into understandable language, empowering you to ask questions about what you’re hearing in order to make informed decisions
• Implementing strategic plans into daily life: We help you incorporate long-term financial strategies into your month-to-month budget, making those big goals manageable.​
• Providing personalized guidance: We offer tailored advice that considers your unique financial situation, helping you navigate challenges and opportunities effectively.​
• Enhancing financial confidence: We support you in building confidence around financial decisions and conversations with your team, reducing anxiety and promoting a proactive and collaborative approach to wealth management. No one builds wealth alone!

You deserve to feel confident in your cash flow and tax plan — and yes, that includes avoiding last-minute scrambles or couch-buying regret because you thought you were in the clear (don’t worry, we’ve been there too). 

If you need someone to walk you through this and make sure you don’t miss another deadline or overpay, we’ve got you.

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