Hi all. My wife works full-time for a private employer, while I work part-time as a private consultant. We file jointly. In 2022, I received a consulting fee in a lump sum on Dec. 16 covering the 12 month period starting Dec 1. We also had interest and dividend income.
I didn't even expect to still be consulting 2023 (otherwise retired) but, in mid-November, my client asked me to extend and sweetened their offer. Given the last-minute decision to continue, I certainly wasn't making estimated tax payments through 2022, but the IRS is assessing a payment penalty as if I was essentially failing to make tax payments.
TT says if we annualize our income, we may be able to reduce the penalty. Given that the consulting fee represents roughly 37% of our 2022 adjusted gross income, is it worth the effort?
I realize such decisions are subjective, but I'm hoping others who may have faced similar circumstances might be able to shed some light on whether they chose to annualize their income under similar circumstances as ours.
Thanks in advance!
Ken
