I have a regular, salaried position where my employer withholds my taxes as per normal. I also do some 1099 contract work on the side for folks, where no taxes are withheld. Can I just adjust my employer's withholding to take out an extra amount each month so at the end of the year the extra amounts have covered my 1099 tax liabilities? It all goes into the same bucket, right?
Yes, asking your employer paying you W-2 wages to withhold additional income tax is a convenient way of paying taxes on self-employment income without the hassle of making quarterly payments of estimated tax. This is particularly useful if your self-employment income starts (or increases dramatically) towards the end of the year when you already have missed some quarterly payment deadlines. Taxes withheld are regarded as being withheld uniformly through the year even if there was a big increase in withholding in the last few months. That is, one-fourth of the total amount withheld is deemed to have been paid in timely fashion as the quarterly installment due, and so one can avoid penalties for underpayment of tax in earlier quarterly installments. Be sure to include enough to cover the Social Security tax and Medicare tax owed by you on your self-employment income (both the employer's share and the employee's share) in your calculations when you ask your employer to withhold additional income tax from your wages. As you say, it all goes into the same bucket on your Form 1040.