2018 estimated tax question

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petesamprs
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2018 estimated tax question

Post by petesamprs » Sun Apr 15, 2018 12:09 pm

I'm having some trouble calculating in turbotax the first estimated tax payment I should make for 2018. Married filing jointly and we have w2 wage income (with withholding) plus schedule c business income (no withholding).

I went through TurboTax questions for estimating what income will be for 2018, but I get stuck where it asks to estimate what my 2018 withholding will be from the W2 job. The W2 income is somewhat lumpy with bonuses etc, so even though i can predict the income it is hard to predict the withholding. I can't just annualize what has been withheld to date, plus I'm doing single with zero exemptions and I'm withholding extra above that. Is there an easy calculator for this?

Also, if my total 2018 tax bill is estimated to be x, and if my withholding by April 15 is at least 25% of x, can I skip the first estimated tax payment? I had a bonus in Q1 which I think was withheld at a higher rate, so I'm above 25% of expected thus far, but in future periods I'll undershoot. Is it looked at quarterly, or will the IRS say you should have been making estimated tax payments in each period of the year even if you withheld enough for Q1.

Silk McCue
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Re: 2018 estimated tax question

Post by Silk McCue » Sun Apr 15, 2018 3:39 pm

You received a couple of answers related to this on another thread that you joined in on this past Tuesday. If you didn't see them they may hold the answers you are looking for or give you enough information to move forward in a reasonable fashion.

viewtopic.php?f=2&t=246643&p=3874821#p3874851

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FiveK
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Re: 2018 estimated tax question

Post by FiveK » Sun Apr 15, 2018 3:53 pm

If your W-2 income is large enough relative to your Schedule C income, doing all your tax payments via withholding is likely your best course.

petesamprs
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Re: 2018 estimated tax question

Post by petesamprs » Sun Apr 15, 2018 7:27 pm

Silk McCue wrote:
Sun Apr 15, 2018 3:39 pm
You received a couple of answers related to this on another thread that you joined in on this past Tuesday. If you didn't see them they may hold the answers you are looking for or give you enough information to move forward in a reasonable fashion.

viewtopic.php?f=2&t=246643&p=3874821#p3874851

Cheers
Yes thanks I saw that after my post. That addresses the timing question. But my main question of how to project my withholding for the full year still stands. How do people project what their company will withhold by end of year?
FiveK wrote:
Sun Apr 15, 2018 3:53 pm
If your W-2 income is large enough relative to your Schedule C income, doing all your tax payments via withholding is likely your best course.
Yes that was my plan all along which is why I am withholding extra beyond the single with 0 exemption, but now i'm not sure if even that is enough to meet the 90% of 2018 tax target. Hence the estimated tax question.

Silk McCue
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Re: 2018 estimated tax question

Post by Silk McCue » Sun Apr 15, 2018 8:54 pm

The recommendation to use the W-2 to manage your tax burden can be accomplished by periodically reviewing your withholding vs current anticipated income tax burden and modifying the additional amount held. If all your withholding comes through the W-2 earnings and you have met the threshold you referenced then you will be fine. I would check for the withholdings in June and September or on some schedule you feel comfortable with.

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petesamprs
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Re: 2018 estimated tax question

Post by petesamprs » Mon Apr 16, 2018 6:43 am

thank you. just to be 100% clear, you are saying that if I find that I am undershooting on withholding later in the year I can just increase my w2 withholding at that time to ultimately meet the minimum withholding threshold, even if the increase results in a back-end loaded withholding? For example, if I run meaningfully short of the 90% threshold by December 1 and withhold almost my entire last 2 paychecks to barely get to the 90% threshold, i would avoid an underpayment penalty correct?

thanks again for clarifying this.

Silk McCue
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Re: 2018 estimated tax question

Post by Silk McCue » Mon Apr 16, 2018 7:26 am

Yes. See the citation below. However, I would not use that as an intentional last minute strategy because you just never know what December might bring.

"Because, payroll withholding are treated as being made evenly through the year, regardless of when the withholding is actually done, if you arrange to have sufficient extra tax withheld towards the end of the year, you can avoid estimated tax liability."

https://www.bizfilings.com/toolkit/rese ... -penalties

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Bacchus01
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Re: 2018 estimated tax question

Post by Bacchus01 » Mon Apr 16, 2018 7:31 am

Silk McCue wrote:
Sun Apr 15, 2018 8:54 pm
The recommendation to use the W-2 to manage your tax burden can be accomplished by periodically reviewing your withholding vs current anticipated income tax burden and modifying the additional amount held. If all your withholding comes through the W-2 earnings and you have met the threshold you referenced then you will be fine. I would check for the withholdings in June and September or on some schedule you feel comfortable with.

Cheers
This. Readjust monthly if you want. I do this at least quarterly. Takes just a few minutes on the irs website calculator.

Bacchus01
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Re: 2018 estimated tax question

Post by Bacchus01 » Mon Apr 16, 2018 7:33 am

petesamprs wrote:
Mon Apr 16, 2018 6:43 am
thank you. just to be 100% clear, you are saying that if I find that I am undershooting on withholding later in the year I can just increase my w2 withholding at that time to ultimately meet the minimum withholding threshold, even if the increase results in a back-end loaded withholding? For example, if I run meaningfully short of the 90% threshold by December 1 and withhold almost my entire last 2 paychecks to barely get to the 90% threshold, i would avoid an underpayment penalty correct?

thanks again for clarifying this.

Yes. I usually do Married an 10 for the first half of year. Step it up the n Q3, then completely close the gap in n Q4.

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