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Message
Best way to allow withholding to sit for tax season?
Posted on 2/23/17 at 1:44 pm
Posted on 2/23/17 at 1:44 pm
My side job of coaching is a 1099-MISC and pays $24,000/year. I anticipate moving forward I will have to pay about $6,000 annually in taxes. As opposed to just saving that $500 in my checking, what is a good, safe place I could store it? Even just 1% could add up over time.
This post was edited on 2/23/17 at 2:27 pm
3
Posted on 2/23/17 at 2:00 pm to rpg37
Goldman Sachs savings account. FDIC insured and yields 1.05% with no minimum.
Posted on 2/23/17 at 2:42 pm to rpg37
I'm not a CPA, but I believe that technically you are supposed to pay quarterly estimated taxes to a tune of about 90% of what you will owe the first year and then something close to that number after that.
I don't know what the penalty or how that works, but the IRS wants their money as you go they don't want you just to wait and pay $6000 in April of the following year.
ETA: You could also withhold more from your W-2 position to make up that $6000.
I don't know what the penalty or how that works, but the IRS wants their money as you go they don't want you just to wait and pay $6000 in April of the following year.
ETA: You could also withhold more from your W-2 position to make up that $6000.
This post was edited on 2/23/17 at 2:43 pm
Posted on 2/23/17 at 3:29 pm to baldona
Yep.
You should probably sit down with a CPA and run some projections to see if you need to make quarterly estimates. It's possible underpayment penalties could exceed any interest earnings you'd recognize.
You should probably sit down with a CPA and run some projections to see if you need to make quarterly estimates. It's possible underpayment penalties could exceed any interest earnings you'd recognize.
Posted on 2/24/17 at 8:15 am to rpg37
You need to pay estimated taxes or you will get a penalty. Pretty simple.
Posted on 2/24/17 at 12:08 pm to ColdDuck
Not if he qualifies under safe harbor provisions. Don't pay estimated unless you have to.
Posted on 2/26/17 at 6:54 pm to sneakytiger
quote:
Not if he qualifies under safe harbor provisions. Don't pay estimated unless you have to.
How does this work?
Posted on 2/27/17 at 9:58 am to sneakytiger
You realize he said $6,000 in taxes right? So if he paid 100% of that he'd be paying $60,000 in income tax? Which means his income is around $250,000 or more? Maybe that's the case but most with that income have a CPA. I'm guessing he is not doing that.
As I said earlier OP, one of the easiest ways honestly is to just increase your w-2 tax withholding to where it's 90% or more of your taxes due. Then you don't have to pay quarterly taxes. You can even withhold an extra $X amount to do this, say $200/ month.
As I said earlier OP, one of the easiest ways honestly is to just increase your w-2 tax withholding to where it's 90% or more of your taxes due. Then you don't have to pay quarterly taxes. You can even withhold an extra $X amount to do this, say $200/ month.
Posted on 2/27/17 at 11:07 am to baldona
I don't follow your math, but it's pretty simple. Depending on his earnings, as long as he's comfortable that he's withholding 100 (or 110 if a high earner) percent of what he paid in tax last year, there is no risk of penalties.
Posted on 2/27/17 at 11:28 am to sneakytiger
I have two jobs: Teaching: $50k and Coaching club: $24k. The latter pays with a 1099-MISC. I predict that portion is taxed at 25% and will come out to me owing $6,000 by next April. The teaching portion of course is taxed already.
My deductions include two home mortgages and interest on them. So, probably closer to $4,000 by tax day after taking those into account.
My deductions include two home mortgages and interest on them. So, probably closer to $4,000 by tax day after taking those into account.
Posted on 2/27/17 at 11:39 am to rpg37
Let's say you paid $10k in federal taxes last year, on your teaching income. As long as you pay at least $10k this year, either through regular withholdings or estimated payments, you should not get hit with an underpayment penalty when you file and write a check in April. People really understimate the power of this rule. Disclaimer:I am not a tax CPA so I'll defer to the regulars, but I have dealt with this personally.
This post was edited on 2/27/17 at 11:40 am
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