Intermittent Freelance work tax coming out of regular full time job taxes

[RAHOWARD]

I work intermittently as a freelancer making at max $25k per year. I have another full-time job that takes out taxes as normal as well. In order to make sure I had enough to cover taxes from the possible freelance profits through the year, I had my full-time job start taking out an extra $200 for taxes out of each of my paychecks. 

Will this work to cover my freelance taxes? Or do I need to set up a different quarterly payment system? 

[mbexpert]

You should be sending in quarterly estimated payments to cover the extra income tax and self employment taxes.  You can also do what you are doing and  increase your withholding at work if it will be enough.

You must make quarterly estimated tax payments for the current tax year if both of the following apply:

- 1. You expect to owe at least $1,000 in tax for the current tax year, after subtracting your withholding and credits.

- 2. You expect your withholding and credits to be less than the smaller of:

    90% of the tax to be shown on your current year’s tax return, or

  100% of the tax shown on your prior year’s tax return. (Your prior year tax return must cover all 12 months).

To prepare estimates for next year you start with your current return, but be careful not to change anything.  For Online returns, if you can't get back into your return, Click on Add a State to let you back into your retun.

You can just type W4 in the search box at the top of your return , click on Find. Then Click on Jump To and it will take you to the estimated tax payments section. You can choose here to change your W4 to make sure you are having enough withheld . You can also say no to changing your W-4 and the next screen will start the estimated taxes section.

Or Go to….

Federal Taxes or Personal (Desktop H&B)

Other Tax Situations

Other Tax Forms

Form W-4 and Estimated Taxes - Click the Start or Update button

To just estimate the remaining quarters put in that you paid $1 for the missed quarters so it will only calculate the remaining quarters.

How to make the Estimated payments

https://ttlc.intuit.com/community/tax-payments/help/how-do-i-make-estimated-tax-payments/00/25875

Here are the blank Estimates and instructions…..

http://www.irs.gov/pub/irs-pdf/f1040es.pdf

The 1040ES quarterly estimates are due April 18, June 15, Sept 15 and Jan 16, 2024.  Your state will also have their own estimate forms.

Or you can pay directly on the IRS website https://www.irs.gov/payments

Be sure to pick the right kind of payment and year.....2023 Estimate

2

Reply

[mbexpert]

You should be sending in quarterly estimated payments to cover the extra income tax and self employment taxes.  You can also do what you are doing and  increase your withholding at work if it will be enough.

You must make quarterly estimated tax payments for the current tax year if both of the following apply:

- 1. You expect to owe at least $1,000 in tax for the current tax year, after subtracting your withholding and credits.

- 2. You expect your withholding and credits to be less than the smaller of:

    90% of the tax to be shown on your current year’s tax return, or

  100% of the tax shown on your prior year’s tax return. (Your prior year tax return must cover all 12 months).

To prepare estimates for next year you start with your current return, but be careful not to change anything.  For Online returns, if you can't get back into your return, Click on Add a State to let you back into your retun.

You can just type W4 in the search box at the top of your return , click on Find. Then Click on Jump To and it will take you to the estimated tax payments section. You can choose here to change your W4 to make sure you are having enough withheld . You can also say no to changing your W-4 and the next screen will start the estimated taxes section.

Or Go to….

Federal Taxes or Personal (Desktop H&B)

Other Tax Situations

Other Tax Forms

Form W-4 and Estimated Taxes - Click the Start or Update button

To just estimate the remaining quarters put in that you paid $1 for the missed quarters so it will only calculate the remaining quarters.

How to make the Estimated payments

https://ttlc.intuit.com/community/tax-payments/help/how-do-i-make-estimated-tax-payments/00/25875

Here are the blank Estimates and instructions…..

http://www.irs.gov/pub/irs-pdf/f1040es.pdf

The 1040ES quarterly estimates are due April 18, June 15, Sept 15 and Jan 16, 2024.  Your state will also have their own estimate forms.

Or you can pay directly on the IRS website https://www.irs.gov/payments

Be sure to pick the right kind of payment and year.....2023 Estimate

[RAHOWARD]

The reason I came up with the extra $200 in withholding from my regular job was: 

15% of $25k in freelance = $3750 in probable taxes 

$3750 divided by 26 paychecks = $145 approximately 

(I set it to $200 just to be extra careful!)

So I figured after the extra withdrawals I set up at the end of the year there shouldn't be any more owed - and maybe even still a little return back. 

Does that make sense? That means I shouldn't have to pay a quarterly amount if I do this, right? 

Thanks for the help! 

[mbexpert]

You also need to take into consideration self employment tax. In addition to the income tax on the freelance income, you are also required to pay self employment taxes which are social security and medicare taxes.

The self employment tax rate is 15.3%. It is the sim of 12.4 social security and 2.9 Medicare tax . This is calculated on your net earnings from self employment. You are then allowed a deduction for the employer portion of the tax 7.65% .

This means that depending on your tax rate , you will pay income tax on your net earning and also 7.65 % Social Security and Medicare ( SE tax)

Here are the tax brackets:

023 tax brackets: single filers

Tax rate	Taxable income bracket	Tax owed
10%	$0 to $11,000.	10% of taxable income.
12%	$11,001 to $44,725.	$1,100 plus 12% of the amount over $11,000.
22%	$44,726 to $95,375.	$5,147 plus 22% of the amount over $44,725.
24%	$95,376 to $182,100.	$16,290 plus 24% of the amount over $95,375.
32%	$182,101 to $231,250.	$37,104 plus 32% of the amount over $182,100.
35%	$231,251 to $578,125.	$52,832 plus 35% of the amount over $231,250.
37%	$578,126 or more.	$174,238.25 plus 37% of the amount over $578,125.

Your freelance income will be subject to income tax at your tax rate and also 7.65% of self employment tax

[RAHOWARD]

So I should really be having $145 for income tax plus an additional $73 (7.6% of $25k divided over 26 checks) as well for the other taxes from each paycheck? So having my regular job withhold $218 instead to cover everything by the end of the year? Am I going to get any penalties for not paying till the end of the year?