First year self-employed, confused on quarterly estimates. Here are the facts:
- Total federal tax liability of $40K in 2018
- Applied $18K of my refund (10/15 extended filer) to 2019 liability
- Received a W-2 in 2019 for Q4 work - total fed tax withheld of $50K
- Did not make any quarterly estimated payments at all in 2019
- Anticipate my 2019 total tax liability to be $150K
So, I'm not sure if I will be penalized or not...? Or how that works? Clearly I have remitted over 110% of my 2018 liability, but it was thru employer withholding in Q4 2019 and my 2018 refund applied to 2019. Any thoughts here?
Thanks!
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You should be fine. The IRS considers the W-2 withholding to have been paid throughout the year.
Thanks for the quick response! I thought that was how it may work, but was not entirely sure. Makes sense.
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