in Education
I have a regular job paid with a W-2 and a side gig paid with a 1099-NEC.
I set up my W-4 at my regular job to have about $500 in extra Federal withholding (and $200 extra for State) each paycheck to pay for the estimated taxes owed on the 1099 job.
I understand that I have to pay both federal income tax and self employment tax on my 1099 job.
My question is, how is the $500 in Extra Withholding split up between federal income and self employment tax? Does it cover both of these taxes or does it only cover one but not the other?
Thanks in advance!
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BOTH
Estimated tax payments and excess withholding is used to compensate for any FICA (Self-Employment) tax you might owe.
Everything is figured on the tax return for a Self-Employed individual.
A W-2 employee has a portion of their FICA paid by their employer, so those payments are handled a little differently.
The Self-Employed Taxpayer pays both halves, but then also gets a credit for half. This is computed and paid on the Self-Employed's tax return.
BOTH
Estimated tax payments and excess withholding is used to compensate for any FICA (Self-Employment) tax you might owe.
Everything is figured on the tax return for a Self-Employed individual.
A W-2 employee has a portion of their FICA paid by their employer, so those payments are handled a little differently.
The Self-Employed Taxpayer pays both halves, but then also gets a credit for half. This is computed and paid on the Self-Employed's tax return.
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