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I work a regular salaried job. I did a side job and earned $825.00 on 5-23-18. I figured this was going to be my only side gig for the year, so I thought I would pay taxes at tax time (April 2019), since the taxes on that didnt meet the IRS $1000 threshold for an Estimated Tax Payment.

I just found out I got another side gig for $7500.00 that will be paid in late Oct 2018. This job will require that I purchase many materials with the money, and I hope to keep the remainder. How do I pay the taxes on this? What about the earlier job that I didnt pay for yet? (now that my total tax bill will be over $1000 for the year)

Side note: Ive also read that you can pay for the taxes by adding an adjustment to my W4 with my salaried job, but I dont know how that works with my situation, if at all.

Thanks!

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How do I pay the taxes on this? What about the earlier job that I didnt pay for yet? (now that my total tax bill will be over $1000 for the year)

The $1,000 applies to your entire tax bill for the year, not per salary source. You can also avoid penalties if you pay (or withhold) 90% of the tax due for the year OR 100% of last year's tax paid. So as long as you make enough of an estimated payment so that EITHER your tax due is less than $1,000, OR is less than 10% of your overall tax, OR your total tax paid/withheld is more than your tax paid last year, then you should be fine.

You can also reduce or avoid penalties by filing form F2210, which breaks your tax down in quarters. I'm not certain if this applies to a combination of self-employment tax and salaried withholdings, so you might review the instructions further or talk to a tax professional.

I've also read that you can pay for the taxes by adding an adjustment to my W4 with my salaried job, but I don't know how that works with my situation, if at all.

That is just another way of making sure you withhold enough tax to get below the thresholds above. Instead of making a lump estimated payment, you decrease your exemptions on your W-4 to increase the amount of tax withheld from your paycheck. You can find an online W-4 calculator to see how much additional tax will be withheld and see if that is enough for the rest of the year. You'll need to remember to change it back for next year, though, unless you expect these "side gigs" to continue.

  • Usually I have a sizable refund, so does mean I wont be left with $1000+ of tax due? Does that mean it is all taken care of? Or should I still make a tax payment on this 1 specific job? – scott.schaffer Oct 11 '18 at 14:22
  • I don't know. You'd have to do some rough calculations to be certain - figure out your entire income for the year, subtract deductions, calculate your tax based on current brackets, and see how much is scheduled to be withheld. If you're already withholding more this year than your tax bill last year, then you should be fine. You could certainly make a tax payment to be safe; at worst you'll just get it back as a refund next year. – D Stanley Oct 11 '18 at 14:25
  • thanks for all the information! it's been very helpful. How do I make a 1 -time payment? – scott.schaffer Oct 11 '18 at 14:30
  • irs.gov/payments – D Stanley Oct 11 '18 at 14:41
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    @DStanley It's generally best practice when you want more withheld not to adjust allowances but to use line 6 on the W4, "Additional amount, if any, you want withheld from each paycheck" – Hart CO Oct 11 '18 at 15:43

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