I have extra money taken for fed

[inky-rocketmail-]

I don't think my question posted. I have extra money taken for fed and state from my regular full time job to cover taxes for my side hobby/job. Have the rules changed and I now have to fill quarterly instead of yearly or I will get a penalty at tax time next year?

[LenaH]

No, the rules have not changed. The federal underpayment penalty generally only applies when you owe more than $1,000 in federal tax on your tax return. Per the IRS, most taxpayers will avoid this penalty if they either owe less than $1,000 in tax after subtracting their withholding and estimated tax payments, or if they paid at least 90% of the tax for the current year or 100% of the tax shown on the return for the prior year, whichever is smaller. If your extra withholding covers your self-employment/hobby income, then you should not have to make estimated tax payments. 

It is important to note that the amount for requiring state estimated taxes will depend on which state you reside in. Please comment below if you need additional guidance for your state requirements. 

@inky-rocketmail-

[inky-rocketmail-]

Thank you so much for the information. I'm in New York. Will that make a difference?

[LenaH]

Yes. If you are expected to owe more than $300 dollars in tax to either New York State, New York City or Yonkers after deducting tax withheld and credits that you are entitled to claim, then you should pay estimated taxes. NYS expects your tax withheld during 2021 to be at least: 90% of the tax shown on your 2021 return or 100% of the tax shown on your 2020 return.

If you need to add/review NYS estimates, you can do so on the screen titled Additional Tax Situations. Click Start on Review Estimates Calculated. 

@inky-rocketmail-