One of is no longer on a W2 starting in 2024. I'm trying to sort out estimated taxes. Because income can be highly variable my thinking was to make a best guess at the overall 2024 income from all sources, calculate the federal tax on that, subtract what the W4 withholdings will be for one of us, divide by 4 and pay that quarterly. That's easy enough to do, and I've already done that.
My concern is, what if real income is higher or lower? Variability could be significant (+/-20%?). Initially I thought it would be easy enough to re-run the calculation quarterly and make a payment to correct for that YTD estimated income for 2024, and make sure the estimated taxes are updated. But from reading forms and threads, it may not work that way.
Example: Imagine I expect tax bill to be 100k for 2024. Calculations say pay 25k 4 times. Come May, I realize it will be a great year and my tax bill may be 120k. I should just be able to write a check for 35k to get me to 60k for the correct mid-year estimated tax total of 60k. I could do that the ensuing two quarters.
Is it as simple as that?
My concern is, what if real income is higher or lower? Variability could be significant (+/-20%?). Initially I thought it would be easy enough to re-run the calculation quarterly and make a payment to correct for that YTD estimated income for 2024, and make sure the estimated taxes are updated. But from reading forms and threads, it may not work that way.
Example: Imagine I expect tax bill to be 100k for 2024. Calculations say pay 25k 4 times. Come May, I realize it will be a great year and my tax bill may be 120k. I should just be able to write a check for 35k to get me to 60k for the correct mid-year estimated tax total of 60k. I could do that the ensuing two quarters.
Is it as simple as that?
Statistics: Posted by Miguelito — Sun Feb 25, 2024 5:43 pm — Replies 4 — Views 388