My husband and I both work full-time in salaried positions and file jointly. We also have rental income and another side job (self-employed LLC so no withholdings). The extra income is variable. Is it better to make quarterly estimated tax payments based on what the variable income was for that quarter, or should we just increase the withholdings on our salaried income so that we have a goal of owing less than $1000 when filing?
Hello and thank you for your question. You can do either/or.
You can make estimated tax payments at https://www.irs.gov/payments and the easiest way to calculate your taxes is to use the tax calculator from https://turbotax.intuit.com/tax-tools/.
You can also have your employer withhold an extra allowance at every paycheck by filling a new form W4 and submit it to your payroll department. You can use the W-4 Calculator 2023 at https://turbotax.intuit.com/tax-tools/calculators/w4/.
I hope this answered your question. Thanks and have a wonderful day