Do I have to pay if I'm already over?

Arianashah · ‎August 28, 2024

I am no longer a W2 employee since I left my teaching job in August. I'm now doing contract work. When I use the tax calculators from you or the IRS to estimate based on what I think I'm going to earn the rest of the year it says I've already contributed over the amount I will owe. Do I still have to pay estimated quarterly taxes if I've already contributed what I'm going to owe for the year?

I have a side W2 gig that I have extra taxes withheld from. I'm making less money from this job now too but still paying the same in taxes. I think that is why the calculators say I've already contributed what I'm going to owe in taxes this year.

Please help, my situation seems confusing!

marctu

While I can appreciate you saying it is confusing, I want to commend you on actually going ahead and using a calculator to see what your current tax position. Pre-planning is super important when you are earning money when self-employed. If your self-employed net income is not significant, I often advise clients to adjust their Form W-4 You had done this previously to withhold more taxes, which again is great planning. So, if the calculator is showing that you are well withheld go with that. You do not want to significantly overpay by paying more taxes at this point.

Thank you for your question @Arianashah, and kudos on a job well done in planning ahead.

Be well and safe!

Marc T.

Turbo Tax Expert

27 Years of Experience Helping Clients

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Arianashah

Thank you. Will I get penalized for not paying estimated quarterly taxes if I am a 1099 worker? I expect to get a few 1099 forms at the end of the year for my contract work. But again, it is not going to be anything compared to what I was making when I was working full time.

marctu

If you are currently in an overpay position and remain in one at the end of the fourth quarter you will not be penalized. You do want to revisit this as the fourth quarter goes on though, but at this point based upon all your inputs, the answer would most likely be no, assuming all the inputs are correct.

Thank you so much for your question @Arianashah