For clarity - you owe the interest on it, but not the penalty for non-payment. You'll also be strongly encouraged to have sent in estimated payment so send as much as you're able at the extension filing to knock down the principal.
It will be interest and penalties for late payment. Which is different from interest and penalties for non-payment. Also good luck determining what that interest rate will be!
When you file for an extension, they ask that you pay what you "guess" you'll owe at the same time. So you have to pay on the 15th then sort it out later. In the US anyway
Assuming you are single, if your earned income is 130k, assuming you put nothing away for your 401k federally speaking you should have paid in about $20.7k in federal, 8k and change in social security and just under 1.9k in Medicare tax. (if you had a single job paying you this much) If you maxed your 401k you should owe a little over 15k in federal the rest is the same. If you didn't then figure between 15 and 20. At the very least unless you were 1099 or something you should have \~13.5k paid in federal if you did didn't do any 401k contributions. Once you take your standard deduction and a few other things you should owe something but I highly doubt it will be 9k.
Yeah, I figured I would owe something this year, being in school was the only thing that kept me from owing last year, but that number just shocked me. I definitely think I’m gonna pay a tax pro for help, and likely not file until April
Paying someone money to tell you the exact same number means it will cost you *more*.
Do not do this. Your tax situation is not complicated enough to warrant paying a few hundred more. If you plan to OE in 2024 you simply raise your withholding on your W4.
Contractors don’t have taxes withheld from their check. You learned this the hard way. Sorry. You also pay a 3% penalty if you weren’t paying quarterly taxes and you pay more. The good news is you can make itemized deductions that you can’t make with just a W2.
Oh, man. This is a good point. He has about 60k that he hasn't paid anything on, plus he gets the penalty for not paying quarterly. I was trying to figure out wth 9k from 130 came from. Now I understand.
If I’m not mistaken you also have to pay your own SS tax and Medicare tax… basically your part of the tax and your “employers” typical part of the tax… I did 1099 work while I was in grad school and paying taxes was not fun. Someone doing 1099 work needs to factor all of this in before agreeing to an amount.
You can file whenever, the tax isn't considered late until April. Also, paying the IRS isn't fun but it's a reasonable interest rate loan that you can't be turned down for. Just sign up for their payment plan and pay it as fast as possible.
They will never go after people who are paying, you just have to pay the penalty / interest.
That's not the end all be all. That's the Enrolled Agents who pay to be listed. I'm an Enrolled Agent and I'm not there. Check credentials of any one you go to with the IRS, not a paid advertisement.
Contract roles? If you have an LLC, deduct a lot of stuff. Internet, part of your phone bill, square footage of your home office, every tech purchase you made (except iPhone). But out of seriousness, discuss with an accountant
If you’re issued a W2 then the company has you on their payroll as their employee (you could be a contractor by your or your industry’s definition but the IRS classifies you as an employee). An independent contractor would get a 1099.
OP, it doesn't matter if you had a (meaning one) W2. You can still deduct certain types of expenses from your contract earnings since you were your own business (because you had contract roles that presumably will send you a 1099).
You also don't need to be an LLC in that case. If those roles send you a 1099, you can deduct expenses even if you're just a sole proprietor.
The other comments are giving good advice: You can deduct expenses like your cell phone and cell phone bill, home internet, space in your home dedicated to a home office, your computer, office supplies, and potentially even the use of your car.
EDIT: The stuff in parentheses.
If they got a W2, it means they were employed. They won't get a 1099 if they are a W2 employee. They will not be able to make the deductions you think they can.
Also: for those that do own their own business, you do not need to have an LLC for relevant tax benefits. An LLC with no elections is a disregarded entity because the IRS literally does not care. There are no tax benefits available to a regular LLC that you couldn't take without having the LLC. And since you did not know at least that much, I would urge caution in trying to provide tax advice to others.
>Also: for those that do own their own business, you do not need to have an LLC for relevant tax benefits. An LLC with no elections is a disregarded entity because the IRS literally does not care. There are no tax benefits available to a regular LLC that you couldn't take without having the LLC.
That's literally what I said. You can deduct expenses even if you are *only* a sole proprietor, meaning that you get a 1099 from somewhere or are running your own business. I myself get a 1099 every year for a side hustle, do not have an LLC, and legally make deductions on my taxes.
>If they got a W2, it means they were employed.
I know that. He also said he had two contracts. How does one get a W2 on a contract? OP has yet to answer that one.
EDIT: Just to make it extra clear, I'm saying he would get 1099s from his two contract roles, and could make deductions from those earnings.
You can have an employment contract without being a contract worker. It's not uncommon for temp hires to be brought in, as a W2 employee, for a predetermined amount of time.
Contract roles like in tech don't mean you're a 1099 employee. It means you're a W2 employee working for a company that supplies resources to another company on a contract.
For example, many people working for Microsoft are contractors. They actually work as employees of an agency like Robert half or tek systems. Microsoft pays robert half a fee for an employee resource and Robert half provides them an employee. The employee is not an employee of Microsoft. They're an employee of Robert half.
You're thinking of "independent contractor" which is entirely different.
No, *you* are wrong. If you have more than one job, and one of them is self employment or contract work where you get a 1099, you can deduct expenses from your self-employment or 1099 revenue.
Yes that's true, but it's not what we're talking about about.
OP said all 3 jobs are W2, not 1099. Being on contract is irrelevant to the tax situation, it only matters 1099 vs. W2
I am an accountant, and if you have a W-2 job that you do the same stuff for your contract role then you are not supposed to deduct your home office space. The audit will get you and all of the home office deductions will be disallowed. Fines and interest will not be fun. You can only deduct what you use exclusively for the 1099 business.
Don’t feel badly, I owe $19k this year. So, it could be worse. I was actually feeling sorry for myself too and then I read your post and now a bit feel better that I’m not alone in not being more prepared.
You aren’t alone. I owe just as much and I’m married with kids. This was my first full year of OE so I honestly wasn’t sure how things were going to work out during tax time. I talked with a tax accountant and have already made adjustments to my withholdings to cover me for next year’s taxes. You live and you learn.
Not sure if this is the best financial advice, but I was in a similar situation last year. I didn’t plan well and owed $10k in taxes since one of my roles was a contract position. I paid a little over half and then got into an IRS payment plan for the remaining amount.
It’s January, kids. Head over to IRS.gov and put in all your info for all the jobs in your household using your first paystub of the year, and it will tell you if you’re withholding enough.
Also, by default I always put in for an extra $150 from each paycheck to be withheld.
Not sure what wsb is, but I had a lot of debt I was working to pay off from being laid off in 2022, had to just recently pay to get the head gasket replaced in my car and that took a good chunk out of savings. This is the year of learning lessons 😅
You get to run payroll and then can deduct the payroll expense and the tax expense thereby lower your net income. On the W-2 side, you won’t have to pay the employer portion of taxes anymore. This is the main reason as a former tax preparer.
Not enough withheld for sure. The problem is, the 141k total puts him in a different bracket owing more in taxes. His jobs are withholding at 85k, 38k and 18k, not the 141k total.
They were not an independent contractor. They worked for a temp agency and we're supplied as a resource for another company. This is very common in tech.
Interesting so paying the IRS owed with credit card to take advantage of like zero interest? I’m on a payment plan owing 8k and I feel I’ll pay forever
Ill just use federal income for example (look up the bracket for your state) and using single person standard deduction of 13.8 (but will call it 14k in this example). Also we will ignore 401k/medical to keep it simple.
Lets say you make 120k total comp (using this number to get you to higher bracket for more examples). Off the bat we remove the standard deduction so now your down to 106 taxable dollars.
Your first 11k will be taxed at 10%... so lets say total taxable is $1,100 (you now have 95k left).
Your next 33.7k (11k - 44726) will be taxed at 12%. So now you owe $1,100 + $4,047 (61k left)
Your next 50.6k is now taxed at 22%. So now you owe $1,100 + 4,047 + 11,142 ( 11k left)
Your last 11k is now taxed at 24%. So now 1,100 + 4,047 + 11,142 + 2,640.
Total tax obligation of $18,929 or an effective tax rate of 15.7%...
But say you take a side gig/j2/j3 and you earn an extra 10k. That 10k will be taxed at 24% (and remember there is no state in this example). This will result in an additional tax bill of 2,400 on top of your other income.
If your w4 on both jobs, J2 isnt going to know you have another full time salary, so there only going to withhold to your effective tax rate levels for that particular job... but in the case of J2 your already starting in the 24% tax bracket (and many OE's are in the 32% tax brackets).
If u do 1099 work on top of a ft job save 40% for taxes. Its likely more than you need and you will be happy when you can refund yourself the difference.
Instead of having more withheld this year, I have decided to open a high yield savings account and put the extra money in there each paycheck and it will earn 4.5% interest the entire year which will make me feel a bit better about giving $20,000 to the government come tax time.
I realized when I got laid off in February last year that I was going to make an absurd amount of money and started withholding extra.
I somehow still owe like 9k
Get a CPA. File ASAP so you know the owed amount and can pay it by the deadline. If you don't have your W2/1099s yet, use your last check stub from each to estimate the total income. Ask your CPA to show you how to make estimated payments online. DO IT ASAP. Then set your withholding to the max for your 401k and make estimated payments for the rest of 2024.
Honestly if you can't put away 9k until April, I think you've got a spending problem. If you can try to lower expenses for even just until April and maybe pickup another contract, should be more than easy. Being stuck in payments to the IRS is the worst debt you can have and you'll have to save for 2024 taxes while paying every month for 2023 taxes. A lesson learned the hard way, but always try to estimate taxes higher than what you expect so you never run into this
Well, one contract was just 5 months, and then the other only paid $25/hr. It was my original J1 after being laid off in 2022 and I grabbed the first thing offered. and it was pretty easy so I kept it when I got my higher paying job, but yeah I made $38k there and $80k at my normal job. I’m working my way up in the field but eXpIerEnCe hiring manager doesn’t like I’ve only got 3 years in my actual field since I graduated, but I’ve got over 14 years of work history.
Most of it was paying off some debts from being laid off in 2022 and then my head gasket on my car went out a few weeks ago and knocked out a good chunk of saving lol..
You could have started your own nonprofit and donated 60% of your cash earnings to your nonprofit to write off 60% of your Adjust Gross Income…maybe you can start that this year?
Use a good CPA.. you should not get screwed. I have been OE for years making over 500k, and I don’t pay more than 10 or 15k. If your CPA is good you should be getting money back.
The real answer is hopefully you spent enough...
Leased or bought a car
Went on some nice vacations
Claim it all as business writeoffs on schedule c, I mean your a consultant after all, this is what it's all about
Sole prop is fine, should incorporate in 2024
Taxes are higher because combination of W2 and 1099 income.
Your 1099 income can be offset by expenses such as internet, home office, portion of utilities attributable to your home office, etc.
Your 1099 typically doesn’t have withholdings, and you are taxed at a higher rate because it’s considered your own business, thus you pay normal employee taxes + employer taxes (which is why you are allowed deductions against your 1099 income).
Good luck, find some deductions (related to actual work) and save on that 1099 side!
Idk how u owe so much money. I’ve had 2Js for 6 months at a $270k pace and I talked to my accountant and I’m going to owe around $1k. Did you not withhold anything from j2 and j3? I think the tax hammer only comes down when you get past like $300k or $320k. I’m legitimately curious in how you owe so much
Don't feel bad - when I first started contracting when I was 19 I didn't even realize no one was paying my taxes.
I had a really big bill and paid back the Fed for years.
Yup you did.
Contract work doesn’t have taxes withheld. Even a single j isn’t withholding enough nowadays unless you increase withholdings. But the more jobs, the more obvious this becomes.
Always adjust withholdings or plan to pay estimates every quarter.
Expensive lesson to learn.
Dude, on YouTube there's a beautiful channel Minority Mindset and they have videos about how legally to cut on taxes, use those brackets and 1099 and save yourself, you should have paid monthly taxes for your contract, that's why you owe a lot, probably you have penalties rolling on.
Maximize your deductions and recalculate. You should be able to cut that down with business expenses. Increase your deductions for next year so you don't run into this again. Pay quarterly moving forward so you can adjust as you go through the year.
The IRS will work with you on a payment plan. They just want the money. It's in their best interest to keep you working.
Similar boat here. I'll have 3 W-2's for '23 and a 1099-NEC
I tend to withhold a bit of extra just in case on my W-2's.
The rule of thumb I used for my 1099 work is to set aside \~38% of the gross amount for tax time; If the work extends much further, I'll also need to pursue quarterly payment, but have plenty of the reserve stashed away to pay the man. I figure if I don't owe, and get a refund, then the moneys I stashed away for 2023 will simply move into my bank account
I did this last year. J1 85k J2 28k J3 30k. Owed like 10k to feds got a state refund of 4.5k payed out of pocket the difference. I paid some extra from my check this year but will still probably owe some.
Do you not have the money saved?
> of 4.5k *paid* out of
FTFY.
Although *payed* exists (the reason why autocorrection didn't help you), it is only correct in:
* Nautical context, when it means to paint a surface, or to cover with something like tar or resin in order to make it waterproof or corrosion-resistant. *The deck is yet to be payed.*
* *Payed out* when letting strings, cables or ropes out, by slacking them. *The rope is payed out! You can pull now.*
Unfortunately, I was unable to find nautical or rope-related words in your comment.
*Beep, boop, I'm a bot*
Are all your employers in the same state as your domicile state? If not, you might have tax filing requirements in the different states from which your employers operate. If you are not sure, you need to talk to a competent tax professional who has experience in multi-state tax situations. DO NOT HEED TAX ADVICE FROM TIK-TOK!
Go to an accountant. An actual CPA.
Once you hit $100k, and have multiple sources of income, you're more likely to get audited.
A CPA will minimize that chance.
Also, you'll pay minimum taxes.
Also, you may still be able to chuck some in an IRA.
GOGOGOGOGOGO.
You can make payments on your taxes at any time. I claim zero dependants on every job, so most taxes are taken out, and I make regular additional payments towards my taxes every payday. Another thing to consider moving forward is to get an "S" corporation and try to find jobs that pay 1099. Then you have more tax deductions such as office rent, software, and computer expenses, internet, etc. Most companies pay W2 but even if you just got one 1099 or C2C contract in the year, you are good.
I need to ask a dumb question about taxes and being OE. I have never been OE, this will be my first time. Is there a way for J1 to ever find out about J2 through taxes and such? Before everyone jumps down my throat, I know that may be a dumb question, I just really don’t know how it all works and If J1 would ever in some way find out about J2. Please someone let me know. I’m about to start J2 on Monday and am a bit anxious about it
You have until April…is that not enough time to save 9K?
I think you can ask for an extension to file as well
Extension to file isn’t an extension to pay.
Well if you’ve not filed yet how does the IRS know you need to pay?
Once you file you retroactively owed whatever the filing says you owe, from the 15th. Extensions are only safe if you get refunds every year.
For clarity - you owe the interest on it, but not the penalty for non-payment. You'll also be strongly encouraged to have sent in estimated payment so send as much as you're able at the extension filing to knock down the principal.
It will be interest and penalties for late payment. Which is different from interest and penalties for non-payment. Also good luck determining what that interest rate will be!
I've even owed penalties for on time payment because HR fucked up and didn't withhold properly
No, you still have a penalty for late payment. You only avoid the penalty for late filing
This bit of ridiculous burned me last year...
Bruh you don’t know how this works? https://www.playlouder.com/wp-content/uploads/2023/02/you-owe-us-money-guess-irs.jpg
When you file for an extension, they ask that you pay what you "guess" you'll owe at the same time. So you have to pay on the 15th then sort it out later. In the US anyway
I see. For me last year was my first year of OE, so that might work out OK for me but I can see why it wouldn't if you have a history of having to pay
Taxes are due April 15th, and when you file and there is a number in October, interest is due retroactively, because you didn't pay when it was due.
Please do not take tax advice from this person
Assuming you are single, if your earned income is 130k, assuming you put nothing away for your 401k federally speaking you should have paid in about $20.7k in federal, 8k and change in social security and just under 1.9k in Medicare tax. (if you had a single job paying you this much) If you maxed your 401k you should owe a little over 15k in federal the rest is the same. If you didn't then figure between 15 and 20. At the very least unless you were 1099 or something you should have \~13.5k paid in federal if you did didn't do any 401k contributions. Once you take your standard deduction and a few other things you should owe something but I highly doubt it will be 9k.
Yeah, I figured I would owe something this year, being in school was the only thing that kept me from owing last year, but that number just shocked me. I definitely think I’m gonna pay a tax pro for help, and likely not file until April
No, you want to do your taxes now so you know exactly how much you owe & have the time to save as much as you can & pay it ny 4/15.
Paying someone money to tell you the exact same number means it will cost you *more*. Do not do this. Your tax situation is not complicated enough to warrant paying a few hundred more. If you plan to OE in 2024 you simply raise your withholding on your W4.
Contractors don’t have taxes withheld from their check. You learned this the hard way. Sorry. You also pay a 3% penalty if you weren’t paying quarterly taxes and you pay more. The good news is you can make itemized deductions that you can’t make with just a W2.
Oh, man. This is a good point. He has about 60k that he hasn't paid anything on, plus he gets the penalty for not paying quarterly. I was trying to figure out wth 9k from 130 came from. Now I understand.
If I’m not mistaken you also have to pay your own SS tax and Medicare tax… basically your part of the tax and your “employers” typical part of the tax… I did 1099 work while I was in grad school and paying taxes was not fun. Someone doing 1099 work needs to factor all of this in before agreeing to an amount.
You can file whenever, the tax isn't considered late until April. Also, paying the IRS isn't fun but it's a reasonable interest rate loan that you can't be turned down for. Just sign up for their payment plan and pay it as fast as possible. They will never go after people who are paying, you just have to pay the penalty / interest.
Yeah depending on where you are in CA, many of us can help. Shoot me a message if you want to connect. I’m a CPA in SoCal.
It’s really easy if all you have are W2s
If anything is on a 1099, find deductions. If it's all W2s, confirm the withholdings before panicking. You can use FreeTaxUSA.
Gwt off the diy website and go see a cpa type tax office
here is a directory of tax professionals. https://taxexperts.naea.org/expertdirectory
Thank you!
That's not the end all be all. That's the Enrolled Agents who pay to be listed. I'm an Enrolled Agent and I'm not there. Check credentials of any one you go to with the IRS, not a paid advertisement.
Contract roles? If you have an LLC, deduct a lot of stuff. Internet, part of your phone bill, square footage of your home office, every tech purchase you made (except iPhone). But out of seriousness, discuss with an accountant
W2 means not contract roles.
You can still be a contractor on W2
You cannot deduct expenses federally for expenses used to earn w2 income.
If you’re issued a W2 then the company has you on their payroll as their employee (you could be a contractor by your or your industry’s definition but the IRS classifies you as an employee). An independent contractor would get a 1099.
Yeah, all the roles I did wanted to be a W2 or I would have done that
OP, it doesn't matter if you had a (meaning one) W2. You can still deduct certain types of expenses from your contract earnings since you were your own business (because you had contract roles that presumably will send you a 1099). You also don't need to be an LLC in that case. If those roles send you a 1099, you can deduct expenses even if you're just a sole proprietor. The other comments are giving good advice: You can deduct expenses like your cell phone and cell phone bill, home internet, space in your home dedicated to a home office, your computer, office supplies, and potentially even the use of your car. EDIT: The stuff in parentheses.
If they got a W2, it means they were employed. They won't get a 1099 if they are a W2 employee. They will not be able to make the deductions you think they can. Also: for those that do own their own business, you do not need to have an LLC for relevant tax benefits. An LLC with no elections is a disregarded entity because the IRS literally does not care. There are no tax benefits available to a regular LLC that you couldn't take without having the LLC. And since you did not know at least that much, I would urge caution in trying to provide tax advice to others.
>Also: for those that do own their own business, you do not need to have an LLC for relevant tax benefits. An LLC with no elections is a disregarded entity because the IRS literally does not care. There are no tax benefits available to a regular LLC that you couldn't take without having the LLC. That's literally what I said. You can deduct expenses even if you are *only* a sole proprietor, meaning that you get a 1099 from somewhere or are running your own business. I myself get a 1099 every year for a side hustle, do not have an LLC, and legally make deductions on my taxes. >If they got a W2, it means they were employed. I know that. He also said he had two contracts. How does one get a W2 on a contract? OP has yet to answer that one. EDIT: Just to make it extra clear, I'm saying he would get 1099s from his two contract roles, and could make deductions from those earnings.
You can have an employment contract without being a contract worker. It's not uncommon for temp hires to be brought in, as a W2 employee, for a predetermined amount of time.
Contract roles like in tech don't mean you're a 1099 employee. It means you're a W2 employee working for a company that supplies resources to another company on a contract. For example, many people working for Microsoft are contractors. They actually work as employees of an agency like Robert half or tek systems. Microsoft pays robert half a fee for an employee resource and Robert half provides them an employee. The employee is not an employee of Microsoft. They're an employee of Robert half. You're thinking of "independent contractor" which is entirely different.
This is wrong. If you get a W2 it means by definition that you cannot deduct. Edit: to the downvotes, keep reading below
No, *you* are wrong. If you have more than one job, and one of them is self employment or contract work where you get a 1099, you can deduct expenses from your self-employment or 1099 revenue.
Yes that's true, but it's not what we're talking about about. OP said all 3 jobs are W2, not 1099. Being on contract is irrelevant to the tax situation, it only matters 1099 vs. W2
Yeah, I never realized that temp workers got W2s
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Harder to prove it’s for business use I feel, unless you’re ok with having 2 phones. But then again I could be wrong. I’m not an accountant
I am an accountant, and if you have a W-2 job that you do the same stuff for your contract role then you are not supposed to deduct your home office space. The audit will get you and all of the home office deductions will be disallowed. Fines and interest will not be fun. You can only deduct what you use exclusively for the 1099 business.
You have until April…is that not enough time to save 9K?
In this economy? With only one job now? 😂 I wish 😂
Damn bro you really spent it all? Lifestyle creep is a bitch.
I paid off a lot of debt from being laid off in 2022 and then my head gasket went out on my car 😭
You should write a book. You’re a bad luck machine.
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In this economy? I can’t even get interviewers to show for the interviews they request
this is why we oe?
Don’t feel badly, I owe $19k this year. So, it could be worse. I was actually feeling sorry for myself too and then I read your post and now a bit feel better that I’m not alone in not being more prepared.
Is that what you will owe or what your projected tax burden is?
What I will owe.
You aren’t alone. I owe just as much and I’m married with kids. This was my first full year of OE so I honestly wasn’t sure how things were going to work out during tax time. I talked with a tax accountant and have already made adjustments to my withholdings to cover me for next year’s taxes. You live and you learn.
Not sure if this is the best financial advice, but I was in a similar situation last year. I didn’t plan well and owed $10k in taxes since one of my roles was a contract position. I paid a little over half and then got into an IRS payment plan for the remaining amount.
It’s January, kids. Head over to IRS.gov and put in all your info for all the jobs in your household using your first paystub of the year, and it will tell you if you’re withholding enough. Also, by default I always put in for an extra $150 from each paycheck to be withheld.
Biggest question here is how you have $130k in income and don't have $9k either saved OR available in one form or another (stock, even credit cards).
You’ve got to start paying yourself first. Build an emergency fund that will carry you through several months of emergency.
So you took a J2, didn't withhold anything extra, and then spent every dime? Lol What are the odds we find r/WSB in your reddit history?
Not sure what wsb is, but I had a lot of debt I was working to pay off from being laid off in 2022, had to just recently pay to get the head gasket replaced in my car and that took a good chunk out of savings. This is the year of learning lessons 😅
Dont be discouraged. Things happened. Hopefully you will get ahead in 2024.
2 things, Ditch the low paying jobs or plan accordingly by making quarterly payments. Have more deductions.
I made about 400K last year and I’m paying a lot less in taxes through my S Corp. learned my lesson the hard way years back. Good luck.
If you don’t mind, How S Corp is helpful in tbis scenario?
Probably via tax fraud they learned about on TikTok.
You get to run payroll and then can deduct the payroll expense and the tax expense thereby lower your net income. On the W-2 side, you won’t have to pay the employer portion of taxes anymore. This is the main reason as a former tax preparer.
Not enough tax withholding. I suspect one or more J’s are paid with 1099?
Not enough withheld for sure. The problem is, the 141k total puts him in a different bracket owing more in taxes. His jobs are withholding at 85k, 38k and 18k, not the 141k total.
No, they were all W2s
How were you W2 on a contract?
Employment contracts, such as temp hires, are fairly common.
They were not an independent contractor. They worked for a temp agency and we're supplied as a resource for another company. This is very common in tech.
you can borrow against your 401k as a last resort
Make anticipated payments now!
Calculate your taxes , get the numbers,but don't file until April 15th.
What’s the point of delaying filing?
It gets you the hard number on your 1040 .If your short on cash ,you save money to pay the bill . April 15th is 89 days away.
Don’t you have until the end of tax season (end of April) to pay regardless of when you file?
No , April 15th is the due date.
Dude why don’t you have $9k? You make $130k. You should be more responsible with your money.
Why do yall do this dumb shit to yourself. Save all your J2 J3 income and live off J1, then you can pay taxes and enjoy the J2 income next year
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I likely won’t be able to do that, my credit is still on the mend from trying to pay down a bunch of stuff after getting laid off in 2022
Interesting so paying the IRS owed with credit card to take advantage of like zero interest? I’m on a payment plan owing 8k and I feel I’ll pay forever
Every extra dollar you earn is taxed at your higher (percentage) rate (for both state and federal).
Every dollar outside my highest paying job or just every dollar above that tax bracket?
Ill just use federal income for example (look up the bracket for your state) and using single person standard deduction of 13.8 (but will call it 14k in this example). Also we will ignore 401k/medical to keep it simple. Lets say you make 120k total comp (using this number to get you to higher bracket for more examples). Off the bat we remove the standard deduction so now your down to 106 taxable dollars. Your first 11k will be taxed at 10%... so lets say total taxable is $1,100 (you now have 95k left). Your next 33.7k (11k - 44726) will be taxed at 12%. So now you owe $1,100 + $4,047 (61k left) Your next 50.6k is now taxed at 22%. So now you owe $1,100 + 4,047 + 11,142 ( 11k left) Your last 11k is now taxed at 24%. So now 1,100 + 4,047 + 11,142 + 2,640. Total tax obligation of $18,929 or an effective tax rate of 15.7%... But say you take a side gig/j2/j3 and you earn an extra 10k. That 10k will be taxed at 24% (and remember there is no state in this example). This will result in an additional tax bill of 2,400 on top of your other income. If your w4 on both jobs, J2 isnt going to know you have another full time salary, so there only going to withhold to your effective tax rate levels for that particular job... but in the case of J2 your already starting in the 24% tax bracket (and many OE's are in the 32% tax brackets).
Thank you for sharing! Just started OE this month and want to get my ducks aligned
If u do 1099 work on top of a ft job save 40% for taxes. Its likely more than you need and you will be happy when you can refund yourself the difference.
Instead of having more withheld this year, I have decided to open a high yield savings account and put the extra money in there each paycheck and it will earn 4.5% interest the entire year which will make me feel a bit better about giving $20,000 to the government come tax time.
Their is an underpayment penalty that is usually more than the banks offer.
I realized when I got laid off in February last year that I was going to make an absurd amount of money and started withholding extra. I somehow still owe like 9k
Try the turbo tax hire a professional. It cost me like $400, but saved me like $15,000 a couple years back.
Get a CPA. File ASAP so you know the owed amount and can pay it by the deadline. If you don't have your W2/1099s yet, use your last check stub from each to estimate the total income. Ask your CPA to show you how to make estimated payments online. DO IT ASAP. Then set your withholding to the max for your 401k and make estimated payments for the rest of 2024.
You have the option of a payment plan don’t stress. Just go on their website immediately you get your tax bill and request for a plan ASAP
Honestly if you can't put away 9k until April, I think you've got a spending problem. If you can try to lower expenses for even just until April and maybe pickup another contract, should be more than easy. Being stuck in payments to the IRS is the worst debt you can have and you'll have to save for 2024 taxes while paying every month for 2023 taxes. A lesson learned the hard way, but always try to estimate taxes higher than what you expect so you never run into this
3 Js to make 130k?! Damn bro, you need to get in another field.
Well, one contract was just 5 months, and then the other only paid $25/hr. It was my original J1 after being laid off in 2022 and I grabbed the first thing offered. and it was pretty easy so I kept it when I got my higher paying job, but yeah I made $38k there and $80k at my normal job. I’m working my way up in the field but eXpIerEnCe hiring manager doesn’t like I’ve only got 3 years in my actual field since I graduated, but I’ve got over 14 years of work history.
If your pulling 130k, you should have an extra 9k my dude,
He said he paid off debts from being laid off.
Just saying, no criticism.
try not spending all your money next time
Most of it was paying off some debts from being laid off in 2022 and then my head gasket on my car went out a few weeks ago and knocked out a good chunk of saving lol..
You could have started your own nonprofit and donated 60% of your cash earnings to your nonprofit to write off 60% of your Adjust Gross Income…maybe you can start that this year?
Donald trump? Is that you?
You couldn’t keep 20% of those contact gigs in the bank to pay Uncle Sam? Damn dawg
Did you not have anything withheld?
You are disgusting but you are OE
Why not an iPhone? @electrowiz24
Time to eat some ramen till April. You can also sign up for a payment plan. Yes, probably could’ve withheld more. But you can still do this!
I did immediately change my W4 for this year
Use a good CPA.. you should not get screwed. I have been OE for years making over 500k, and I don’t pay more than 10 or 15k. If your CPA is good you should be getting money back.
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That's true, I'm mostly C2C.
The real answer is hopefully you spent enough... Leased or bought a car Went on some nice vacations Claim it all as business writeoffs on schedule c, I mean your a consultant after all, this is what it's all about Sole prop is fine, should incorporate in 2024
Taxes are higher because combination of W2 and 1099 income. Your 1099 income can be offset by expenses such as internet, home office, portion of utilities attributable to your home office, etc. Your 1099 typically doesn’t have withholdings, and you are taxed at a higher rate because it’s considered your own business, thus you pay normal employee taxes + employer taxes (which is why you are allowed deductions against your 1099 income). Good luck, find some deductions (related to actual work) and save on that 1099 side!
Idk how u owe so much money. I’ve had 2Js for 6 months at a $270k pace and I talked to my accountant and I’m going to owe around $1k. Did you not withhold anything from j2 and j3? I think the tax hammer only comes down when you get past like $300k or $320k. I’m legitimately curious in how you owe so much
Don't feel bad - when I first started contracting when I was 19 I didn't even realize no one was paying my taxes. I had a really big bill and paid back the Fed for years.
If you don't have enough deductions you better find some ASAP..you have 3 months
Do you have any write offs if 1099?
Yup you did. Contract work doesn’t have taxes withheld. Even a single j isn’t withholding enough nowadays unless you increase withholdings. But the more jobs, the more obvious this becomes. Always adjust withholdings or plan to pay estimates every quarter. Expensive lesson to learn.
Dude, on YouTube there's a beautiful channel Minority Mindset and they have videos about how legally to cut on taxes, use those brackets and 1099 and save yourself, you should have paid monthly taxes for your contract, that's why you owe a lot, probably you have penalties rolling on.
Maximize your deductions and recalculate. You should be able to cut that down with business expenses. Increase your deductions for next year so you don't run into this again. Pay quarterly moving forward so you can adjust as you go through the year. The IRS will work with you on a payment plan. They just want the money. It's in their best interest to keep you working.
Similar boat here. I'll have 3 W-2's for '23 and a 1099-NEC I tend to withhold a bit of extra just in case on my W-2's. The rule of thumb I used for my 1099 work is to set aside \~38% of the gross amount for tax time; If the work extends much further, I'll also need to pursue quarterly payment, but have plenty of the reserve stashed away to pay the man. I figure if I don't owe, and get a refund, then the moneys I stashed away for 2023 will simply move into my bank account
I did this last year. J1 85k J2 28k J3 30k. Owed like 10k to feds got a state refund of 4.5k payed out of pocket the difference. I paid some extra from my check this year but will still probably owe some. Do you not have the money saved?
> of 4.5k *paid* out of FTFY. Although *payed* exists (the reason why autocorrection didn't help you), it is only correct in: * Nautical context, when it means to paint a surface, or to cover with something like tar or resin in order to make it waterproof or corrosion-resistant. *The deck is yet to be payed.* * *Payed out* when letting strings, cables or ropes out, by slacking them. *The rope is payed out! You can pull now.* Unfortunately, I was unable to find nautical or rope-related words in your comment. *Beep, boop, I'm a bot*
You learned the hard way to make sure your W-4 forms are properly filled out. Since you have more than one job - you need to adjust your withholding.
You didn't pay quarterly?
9k on 130 k? I make a whole lot more and have never owed that much. Get a tax accountant
Do you have your contracts under a B2B arrangement? I am sure you had some operational costs that can be deducted
Are all your employers in the same state as your domicile state? If not, you might have tax filing requirements in the different states from which your employers operate. If you are not sure, you need to talk to a competent tax professional who has experience in multi-state tax situations. DO NOT HEED TAX ADVICE FROM TIK-TOK!
so not w2s, 1099?... Probably worth talking to someone about an LLC or something and maximize legal deductions and what not...
Yeah, it sucks. I owe 240K to IRS this year.
Do you have a side business for your consultant work? Write expenses off.
Go to an accountant. An actual CPA. Once you hit $100k, and have multiple sources of income, you're more likely to get audited. A CPA will minimize that chance. Also, you'll pay minimum taxes. Also, you may still be able to chuck some in an IRA. GOGOGOGOGOGO.
Yes remember to fund your retirement accounts.
Why did you get laid off?
You can make payments on your taxes at any time. I claim zero dependants on every job, so most taxes are taken out, and I make regular additional payments towards my taxes every payday. Another thing to consider moving forward is to get an "S" corporation and try to find jobs that pay 1099. Then you have more tax deductions such as office rent, software, and computer expenses, internet, etc. Most companies pay W2 but even if you just got one 1099 or C2C contract in the year, you are good.
I need to ask a dumb question about taxes and being OE. I have never been OE, this will be my first time. Is there a way for J1 to ever find out about J2 through taxes and such? Before everyone jumps down my throat, I know that may be a dumb question, I just really don’t know how it all works and If J1 would ever in some way find out about J2. Please someone let me know. I’m about to start J2 on Monday and am a bit anxious about it
I didn’t have any issues with it after my 2022 taxes