Irregular income can be a real challenge to manage, as it is often classified as "supplemental income." Supplemental income is not taxed according to your W-4 form instructions, rather, it is taxed at the supplemental rate (typically 22% federally), often leaving you under withheld. This article explains more.
A few ways to deal with that is to first determine what tax bracket you are in. While this calculator is for 2024, it can help you figure it out. You can also look at your TurboTax return to see your marginal rate. While that will be the ending marginal rate (interim income could be lower), it can also help.
If your marginal rate (tax bracket) is above 22%, you can ask your payroll department to withhold at a higher rate, or, if you prefer, you can figure out the difference and send it right to the IRS as an "estimated payment." Here's how you do that.
One thing to be aware of, is that changes you make now will only cover income for the remainder of the year. Consider if you need to do a "catch up" estimated tax payment.
Hope this helps.
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Regards,
Karen
TurboTax Expert
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