Mid-year change to quarterly filing

[aelfa]

I worked at a W2 job the first 7 months of 2024. Now I’m independent. I don’t expect to earn a lot of revenue this first year; however, I will have CDs maturing and other interest income during this second half of 2024. My question is — if I have paid enough through withholdings Jan-July to cover the taxes on the rest of the year’s income, do I need to do anything at each quarterly deadline for this year? I do not want penalties for not paying on the interest income in the quarter it is earned. But I have prepaid. Thanks!

[LoriLeighEA]

Thanks for joining us today, aelfa!

Congrats on going Independent. Yes, it is important to estimate what your taxes will be at the end of the year. Your best course of action is to use a tax calculator - we have a great one. Put in all your projected income (including the W2 income for those 7 months), and the estimated interest etc. Include any tax payments already made including that withholding. This will give you a clearer picture of where you stand: 

TaxCaster Tax Calculator

[Cindy4 · Accepted solution]

If you have enough pre-paid to cover your entire year's income, you should be fine.

Congratulations on your move to independent contractor!  We have some great tools available for estimating taxes due when working independently.  Determine what to pay and when   and how to make estimated payments. 

You always want to keep in mind that your income tax liability will be based on your profit and you are responsible for both FICA- Social Security and Medicare - at a rate of 15.3% AND your income tax, which is based on your marginal rate.

Hope this helps!

Cindy

[aelfa]

Thanks! When I log in to TaxCaster, as a TurboTax customer, it just takes me to the "congratulations" page indicated I've finished filing for 2023. Is there some trick to using TaxCaster as an existing customer? 

[LoriLeighEA]

Sorry about that!

Let me make sure I sent you the right link:  TaxCaster 

Here is another calculator to try:

Self-employment Tax Calculator

They all still say 2023, but they are supposed to work for 2024.

Thanks for letting me know!