Additional Income

[TheSkyrms]

Hello - Thanks for the help.

My spouse is a stay at home parent this year (worked part of the year last year) but is receiving some consulting income (probably a total of $2,000-4,000 expected this year). He had to fill out a W9 but the company is not withholding taxes from the income he receives. I'm a W2 employee with my company. Should I withhold extra Fed to account for this income? We'd prefer not to have to pay quarterly estimates. Is that required? Should I withhold extra for state tax as well? Is there a requirement to pay quarterly estimates on this small amount of income? We also received a bonus of $1,500 from our solar company for a referral. We had to again fill out a W9 but nothing was withheld for taxes. Do we need to account for this in my withholdings or will we be okay? We received a tax refund back last year for approx. $6,000. 

[MelanieCPA]

Hi @TheSkyrms ,

Thank you for joining us today!  I recommend utilizing the W-4 Calculator .  The more financial information you are able to enter into the calculator the more accurate your withholdings will be throughout the year.  Yes, you are correct, Step 4 of the W4 allows you to request additional withholdings from your paycheck for the consulting income and the solar rebate that your received during 2024.  You can use the additional withholdings instead of the quarterly estimated payments.  Keep in mind that if you should continually monitor the self employment income so that you are accurately withholding.  The W-4 can be updated as often as necessary to adjust for changes in income.

Yes you will also need to either increase your withholdings for your state or pay quarterly estimated payments.

Here is an additional resource for completing the W-4 TurboTax How to Estimate Federal Withholding 

Thank you!

Melanie, CPA

[TheSkyrms]

How do we withhold for the self-employment income? Still just on the W4 for my income?

[MelanieCPA]

You can make quarterly estimated tax payments or you can use Step 4 Line (c) on the W4 to request additional withholdings from your paycheck for the self employment income. You will need to determine an estimated self employment income when you complete the Tax Calculator .  The tool will help you determine what amount to list on Step 4 Line (c) as the additional withholding.

Keep in mind that if you should continually monitor the self employment income so that you are accurately withholding.  The W-4 can be updated as often as necessary to adjust for changes in income.