How to handle taxes manually while overemployed?
How do I calculate tax obligations while overemployed?
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Manual Tax Calculation on Multiple W2s
Calculating your own taxes, especially with multiple W2s, can be a bit intricate but is feasible with careful steps and planning.
Steps for Tax Calculation:...
Tax Withholding Estimator | Internal Revenue Service
Use this tool to estimate the federal income tax you want your employer to withhold from your paycheck. This is tax withholding. See how your withholding affects your refund, take-home pay or tax due.
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like-gold•12mo ago
Manual Tax Calculation on Multiple W2s
Calculating your own taxes, especially with multiple W2s, can be a bit intricate but is feasible with careful steps and planning.
Steps for Tax Calculation:
1. Determine Projected Withholdings:
- After receiving the first paycheck, forecast the rest of your withholdings.
- Sum up all federal withholdings. Include anticipated RSU vests and bonuses. This gives you a total,
$X.
2. Utilize the IRS Calculator:
- Use the IRS Tax Withholding Estimator to determine the amount you owe, $Y.
3. Calculate Actual Liability:
- Subtract $Y from $X to arrive at your real tax liability, $Z.
4. Check for Underpayment:
- Divide $X by $Y. If the result is <90%, there's a risk of an underpayment penalty.
- To prevent this, divide $Z by 4 (representing the 4 quarters of the year) and make quarterly payments to the IRS via their payment portal.
- Alternatively, divide $Z by the number of paychecks remaining in the year and adjust the withholding amount in the W4 for any job accordingly.
5. Consult a CPA: While manual calculations can be a good starting point, always consider consulting a Certified Public Accountant for precision and professional advice.
Useful References:
- IRS Tax Withholding Estimator: A tool to calculate how much to withhold.
- IRS Publication 505: Widely used by CPAs for tax withholding guidelines.
- IRS Form 2210: Provides details on how the IRS calculates underpayment penalties.Tax Withholding Estimator | Internal Revenue Service
Use this tool to estimate the federal income tax you want your employer to withhold from your paycheck. This is tax withholding. See how your withholding affects your refund, take-home pay or tax due.