Withholding payments are always considered timely. So, if your wife has W-2 income next year she can adjust her withholding (W-4) to address the tax expected based on your income, then you don’t need to worry about making the estimated quarterly payments.
Hypothetical example below (apologies if overly simple and unnecessarily detailed):
Wife has salary of $200K. You expect to earn $100K through consulting gig (1099-NEC). Use calculator below to estimate tax (2024 bracket derived number will be close enough).
https://engaging-data.com/tax-brackets
Using $300K earned income from above
$25K interest and non-qualified dividends
$25K qualified dividends and LTCG
==> ~$61K Fed tax
(See here for results ==> https://engaging-data.com/tax-brackets/ ... 00&yr=2024)
Now look at most recent paystub of wife’s W-2 job and have wife adjust her withholding to $5K per month ($2.5K biweekly).
In addition, she can increase the withholding to include expected payroll tax (FICA , 7.65%) for your 1099-NEC earnings.
She can also make adjustments to her State withholding if you live in a state with income tax.
If anything changes along the way, simply adjust withholding from wife’s W-2 income.
Note, many folks do this kind of adjustment to avoid underpayment penalties due to income from brokerage account income and other income streams.
Hypothetical example below (apologies if overly simple and unnecessarily detailed):
Wife has salary of $200K. You expect to earn $100K through consulting gig (1099-NEC). Use calculator below to estimate tax (2024 bracket derived number will be close enough).
https://engaging-data.com/tax-brackets
Using $300K earned income from above
$25K interest and non-qualified dividends
$25K qualified dividends and LTCG
==> ~$61K Fed tax
(See here for results ==> https://engaging-data.com/tax-brackets/ ... 00&yr=2024)
Now look at most recent paystub of wife’s W-2 job and have wife adjust her withholding to $5K per month ($2.5K biweekly).
In addition, she can increase the withholding to include expected payroll tax (FICA , 7.65%) for your 1099-NEC earnings.
She can also make adjustments to her State withholding if you live in a state with income tax.
If anything changes along the way, simply adjust withholding from wife’s W-2 income.
Note, many folks do this kind of adjustment to avoid underpayment penalties due to income from brokerage account income and other income streams.
Statistics: Posted by medchemguy — Wed Nov 27, 2024 7:22 am — Replies 4 — Views 315