W2 plus 1099 income for taxes (multiple jobs) and quarterly estimated taxes

[1548432s]

I have a full time healthcare W2 job and I do extra locums work under 1099 with a different company. 

The W2 job I had for over a year and my taxes are withheld and I don't have to worry about the taxes for that part. 

The 1099 job I started in July of 2025. 

I am new to this and started researching about quarterly taxes and I had missed the September 15 deadline since it is already the end of October 2025. 

I maxed out my social security taxes earlier this year from my W2 earnings. 

I am not even sure how to calculate my estimated taxes accurately. Is it just better to overestimate and pay on the IRS website? Will there be a penalty? 

Do I pay on the IRS website and also in my state tax website? 

I am setting aside the money I would be paying in taxes and I estimate that I will owe an additional $41,600 because I will be making $116,000 from this additional 1099 job. 

[VolvoGirl]

You only owe the self employment tax on the Net Profit on Schedule C.   Do you have expenses you can write off on Schedule C?   And if you already paid the max Social Security tax on the W2 wages you only owe the 2.9% for Medicare.   The max wages for 2025 is 176,100.   

One thing you can do is change your W2 withholding to take out more to cover the SE tax for 2025.     Here are the blank Estimates and instructions (the actual 1040ES forms are at the very bottom so scroll way down)

http://www.irs.gov/pub/irs-pdf/f1040es.pdf

Or you can pay directly on the IRS website https://www.irs.gov/payments

Be sure to pick the right kind of payment and year.....2025 Estimate

Here is some IRS reading material……

IRS information on Self Employment

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Self-Employed-Individuals-Tax-Center

Pulication 334, Tax Guide for Small Business

http://www.irs.gov/pub/irs-pdf/p334.pdf

[Opus 17]

At your income level, and with your social security already maxed out, the taxes due on your side income (on top of the regular wages) will likely be 22% or 24% (depending on your tax bracket, filing status, and other income) plus 3% for the medicare portion of social security.  So 25-30% (of net income after any expenses) is probably a good estimate.  You can make payments electronically at www.irs.gov/payments.  If you overpay, that comes back as your refund, of course.  

Yes, you should plan to make separate estimated payments to your state, you will need to look at your state tax brackets, it could be anywhere from 3% to 13% depending on the state.  There is probably an electronic payment web site you can look up.

At this point you should make your Sept 15 estimated payment now, for income earned from June 1-Aug 31, and plan to make a payment by Jan 15 for income earned from Sept 1-Dec 31.  Paying now will reduce any interest that might be due to late payments.  There are also various ways to ask for an abatement of the penalty if one is assessed.

[guywong]

I partially agree with the two previous answers.  You owe 2.9% Medicare tax plus income tax at your highest tax bracket for your Schedule C locum work.  You should also get a 20% QBI (Qualified Business Income) deduction unless you're in certain professional fields, such as medicine.  I wouldn't worry about that for now.

@VolvoGirl is right in that rather than making estimated tax payments, you should first try to increase your withholding for the anticipated additional taxes.  The reason is that, as a general rule,  IRS considers withholding to be paid evenly throughout the year. 

We pay estimated tax in order to avoid IRS underpayment penalties.  The best way to do so, IMO, is to increase your tax withholding so that your total 2025 withhold will equal or exceed 110% of your 2024 total taxes (Line 24 of Form 1040).  If that's not possible, then pay the difference in the form of estimated tax, preferably using Direct Pay at www.irs.gov.  Most states follow the federal rules on underpayment penalties.  But check to confirm that.

Underpayment of estimated tax by individuals penalty | Internal Revenue Service

Avoid a penalty

You may avoid the Underpayment of Estimated Tax by Individuals Penalty if:

• Your filed tax return shows you owe less than $1,000 or
• You paid at least 90% of the tax shown on the return for the taxable year or 100% of the tax shown on the return for the prior year, whichever amount is less. If your adjusted gross income (AGI) for 2023 was more than $150,000 ($75,000 if your filing status for 2024 is married filing separately), substitute 110% for 100%.

[baldietax]

@1548432s the problem at this point with increasing withholding is it's end Oct so by the time your payroll processes a withholding change it probably won't help much for 2025.  But hopefully you don’t owe much Estimated Tax (ES) or penalty if your 2024 tax was much lower before the 1099 gig.

You should go thru the safe harbor calculation shown by @guywong and if this was a new 1099 gig in 2025 and boost to income compared to 2024, then you may have already covered the ES due based on meeting 100/110% of 2024 tax thru withholding; if so, then for ES and penalty purposes it doesn't matter how much extra you earned in 2025 or when.  The rest of the tax is owed in April but at least you won't have to pay a large amount now, so that can earn interest until April.

If there is some amount to make up to meet the safe harbor amount that you can't do via withholding, then as others have said you should pay the overdue ES on this ASAP to stop the penalty accruing further.  To minimize the default penalty calc, pay 75% of the total ES due for the year now (for Q1-3), and the remaining quarterly amount by 1/15 **.  Since the 1099 gig started later in the year you may also be able to file 2210 Annualized Income method to reduce (but likely not eliminate) the penalty, for this you have to break down your AGI/withholding on a quarterly basis which can be extra calcs and filing work for you, whether that's worthwhile depends the penalty outcome (and your state may have similar).  IRS doesn't know your gig started in July so will assume ES was due on it from Q1 and that's the default penalty calculation that Turbotax will make; the AI method will shift the income out into the later quarters which will reduce the penalty.

** @Opus 17 commented above "At this point you should make your Sept 15 estimated payment now, for income earned from June 1-Aug 31, and plan to make a payment by Jan 15 for income earned from Sept 1-Dec 31" - which is likely different to 75%/25% I suggest above.  I think, it depends the outcome of the safe harbor calculation, whether you are using prior year or current year tax and how much ES is due.  Paying a large amount of ES unevenly based on specific income periods would certainly need the Form 2210 AI method.  Otherwise by default you need to have paid by now at least 75% of the ES or will continue to accrue penalty (and can always decide to adopt the AI method later if it helps).  But @Opus 17 pls do correct me on anything.

Refer to Form 2210 lines 1-9 for the safe harbor calculation and other parts of 2210 instructions for info on penalty calcs and AI method.  Form 1040-ES may also be helpful.

When you file with Turbotax you can review the penalty situation in Other Tax Situations / Underpayment Penalty section and work through the AI method there.

Looking ahead for 2026 tax year - if the 1099 gig is going to continue and you can't cover the expected ES with W2 withholding, then you should set up quarterly ES payments; go through the safe harbor calculation for 2026 when go through your 2025 filing so the 'prior year' tax for 2025 is known.  You can work through estimates for this after you file in Other Tax Situations / Form W4 and Estimated Taxes (or other tools like the IRS Tax Withholding Estimator).

As others have said you should pay directly at irs.gov, avoid checks and vouchers.  When you make a payment be sure to classify it for the correct purpose (ES vs. final tax due etc) and tax year.  I also prefer to make my final return payment directly at irs.gov rather than submit payment details in Turbotax etc, select the option to pay by mail/check etc to bypass payment details, then just pay directly at irs.gov by the April deadline.  IRS will debit your account quickly, within the next business day, so have the money lined up when you submit it on the website.

Anyway - start with the safe harbor calc to see where you really stand on ES, and if you have questions once that is known folks here will be able to advise further.

[Opus 17]

@baldietax 

Based on the taxpayer's statement that the locum job started in July, and they had regular withholding from their regular job all year (per normal procedure), they will only owe estimated taxes on the locum income for the last two quarters.

They should probably file form 2210 (penalty calculation) with schedule AI (annualized income method) with their tax return, even if the software does not automatically suggest it.  The annualized income method shows the IRS that even though tax payments were not evenly spread over the whole year, neither was the income (due to the sudden increase in July), and the tax payments did keep pace with the income, which is what the IRS wants to see.

Even if they paid 75% now and the other 25% in January, they could still be assessed a late payment penalty, representing interest due backdated to April 15, June 15 and Sept 15, since that's when the payments were technically due.  Schedule AI should negate that.  If the IRS does assess a penalty anyway, the taxpayer can ask for a first-time waiver, or a waiver for cause (not understanding the requirements for the locum job).

Going forward into 2026, the taxpayer can either increase their W-2 withholding to cover the extra tax on the locum job, or make quarterly estimated payments. 

[Mike9241]

you may not owe the underestimated tax penalties for 2025 if your 2025 W-2 withholding is 100% of your 2024 tax or if your 2024 adjusted gross income was $150,000 or more than 2025 W-2 withholding would need to be 110% of your 2024 tax.  With so much self-employment income you probably should sit down with a tax advisor. There may be ways to reduce some of the extra tax burden like contributing to a retirement plan. Possibly an S corporation. Also keep good records of the expenses you incur with the locums because most if not all would likely be tax deductible

[1548432s]

My W2 withholdings for 2025 is less than 2024. 

As an independent contractor in healthcare, I am not even sure what to deduct. 

I have never used a CPA service besides doing turbotax myself since I was strictly a W-2 income until this year. 

What are red flags for a bad CPA? 

I would need to start an LLC first to get to an S-corp in Virginia. 

Is it too late to start an LLC since I already made income as an independent contractor? 

[Opus 17 · Accepted solution]

@1548432s 

Don't overthink.  Your situation is not that complicated.

Do not start an S-corp without significant legal and tax advice from an expert attorney.  It is a major step, and will provide no tax savings in your situation if you are honest.

The idea with an S-corp is that the hospital contracts with your corporation, of which you are the sole employee and stockholder.  You pay yourself a salary, and if there are extra profits, they are taxed at a reduced rate.  But as a locum tenens, your only product is your own labor.  If a hospital is willing to pay $100/hour, that is your fair market rate, and trying to pay less tax by saying "my fair salary is $50/hr and the other $50/hr is profit to be taxed at a lower rate" is a huge audit red flag.

Forming an LLC may give you some liability protection, but that is also basically irrelevant as a locum.  If you are a sole proprietor as a building contractor and you go bankrupt owing clients money, your personal funds can be seized in bankruptcy.  If you make an LLC, you may get some protection for personal assets if the business fails.  But the amount of protection depends on the state, and the type of business you are doing.   Since you already have, or should have, medical malpractice insurance coverage through the places you work, and you are unlikely to "go out of business" while owing your clients money, forming an LLC is going to be of very limited practical value. 

An LLC with one member files exactly the same tax return as a sole proprietor who has not taken any special steps to form their business.  LLCs may provide some legal liability protection in the state, but the IRS ignores LLCs for income tax purposes.  

In any case, seek legal advice in your state before forming an S-corp or LLC.  I'm sure there are other locums who have accountants help with their taxes, ask around.

As a self-employed person, you can deduct from your income, any expenses that are "ordinary and necessary" for that type of work.  

Business expenses need not be required to be considered ordinary or necessary. Generally, ordinary refers to expenses that are common in the industry and most business owners in the same line of business or trade would normally incur them. Necessary means that the expenses are appropriate and a business owner might not be able to manage without making the expenditure.

Depending on where you work and what kind of work you do, your expenses will almost certainly include mileage (transportation) from one job to another.  Exactly what mileage is deductible is covered in IRS publication 463.

https://www.irs.gov/forms-pubs/about-publication-463

Other ordinary and necessary expenses might be insurance (if you have your own separate policy), scrubs (if you buy your own), a laundry service (if you wash your own scrubs and pay a service instead of washing them at home), medical equipment you use in your work like a stethoscope, blood pressure monitor, otolaryngescope, sanitizing wipes, or anything else you use in providing medical care that is not reimbursed or provided by your client.  (And just for clarity, when you are working as a locum, you are the business, and the medical facility you work for is your client, to whom you are providing services under contract.)  If you have items that are used both in your W-2 job and your locum work, you must allocate the cost proportionally.  (For example, if you work 40 hours a week as an employee and 10 hours per week as a locum, and you use your own stethoscope at both jobs, you can deduct 20% of the cost of a new stethoscope as a business expense.)

The best way to find an accountant to help with these issues is by asking other people in the same situation as you.

You really don't need a CPA (a "certified" public accountant is someone who has an extra certification to do accounting work for publicly traded companies), just an accountant who is familiar with your type of work.  And you likely won't need one very much.  The bookkeeping and taxes are fairly straightforward, once you have an initial meeting to get everything set up so you know what you need to know.