New job change & Supplemental income

[spann0322]

Hello! I just recently changed to a new full time job, and this is where most of my income will be coming in. However, I will be contracting at two of my previous jobs from time to time, one that will be 1099 and one that will still be W2. 

1) How can I determine if they're taking out enough taxes for both my full time job and my other job that does W2 when I look at my checks? How do I change my W4 for each job in order to prevent from owing next year?

2) for the 1099 job, how much tax should I take out of my check, and how do I report/send it to IRS so that I won't be penalized next year?

[ClarissaA]

Hello Spann0322!  

You are taking the right steps by planning for your taxes rather than closing your eyes and hoping for the best.  I'll tackle your questions in order.  

1.) When an employer sets up their payroll withholding, they are working in a bit of a vacuum - they don't know you have more income from other places, unless you tell them about it.  The way you officially notify payroll that there is more income to be considered is by completing an accurate W-4 form.  

It is a good idea to complete a new W-4 at each of your W-2 employers.  You can use our online calculator to help simplify that process.  W-4 Calculator 2023

Our calculator will allow you to enter the information about what you have earned so far this year, and make adjustments for the rest of the current tax year.  Just remember, while you need to fill out a W-4 for each employer you work for, you should only complete Steps 2 through 4 for your highest paying job. For other jobs, leave those steps blank. 

Since you are starting the new job mid-year, you should mark your calendar to follow up and repeat the process again in January of 2024 to make adjustments to both your W-4s again, considering that you would then be at both those jobs for an entire year instead of just part of the year.  

2.) For the 1099 gig income, you can expect to receive a 1099-NEC at tax time.  You will only owe taxes on the net income from your contractor position, not on the gross.  Keep track of your expenses, because the things you spend money on as a contractor can be deductible expenses to offset that income.  When you complete the W-4 withholding calculator, if you have a solid idea of how much 1099 income you will net after your expenses, you can factor that in to what is being withheld from your W-2 wages.  

The IRS doesn't care if the taxes are paid to them from wage withholding or via estimated payments - they just care that the taxes are paid!  If you don't want to have extra taxes withheld from one of your paychecks, you can plan to make quarterly payments to the IRS at irs.gov/payments 

If you are planning to make estimated payments directly to the IRS, you will need to determine what tax bracket you are in, and then use that information to calculate how much tax to pay on your 1099 income.    

2022-2023 Tax Brackets 

Let me know if this helps!