Advice on 2019 taxes..

[Rukh O'Rorke]

so some of you know I owed the IRS a lot of money this year! Set to pay that off in the next month or so, and I want to avoid that happening again. It really put a crimp in my summer plans!!!

Briefly, in 2018 I had income from 3 separate jobs. Transitioned from one FT job to another, and had a PT job all year. Got a large vacation payout switching jobs, which may have also been contributing. They took out only 10% for fed taxes if I recall. I think I am on track for my day job this year - perhaps paying a bit too much? - and I have been working only one job all year.

Recently, I've pulled in two Rukh, Inc. projects - this if for the same client. One is complete and paid, the other is just starting the LOI stage and would need to be completed sometime in November. It won't be a whole lot of money in 2019, I'm estimating a max of about 6k total for 2019 but could be more or less depending on the scope of work for the second project. I want to get this right as my current estimate for 2020 based on tacit agreements will be about 30k. Still need to define via LOIs and tacit agreements can evaporate, but just doing my best-guessing right now.


Question 1)


according to this site here, and the table for 2019 taxes
www.nerdwallet.com/blog/taxes/federal-income-tax-brackets/

this would fall under a 24% tax rate. I will also owe medicare taxes @2.9% and state taxes of 4.95%. I will cover the SS max on my day job.

so on a per $1,000 - how would I compute the expected taxes?

Does the medicare come off the top and then apply fed and state? This would be $310.11 taxes per $1,000. That is almost a third, so that would be good information for me when quoting out jobs.....I was guesstimating about 25% when quoting thus far.

Or do they all come off the top (from 1000 - that would be a bit more), or does state not count the fed tax or vice versa (that would be a bit less)?



Question 2)

Where do I save or what do I do with the money that will be taxes?

I'm paying plenty of taxes at day job, and I've thought perhaps it was too much but was reluctant to lower it until I file my 2019 taxes and be sure of that. With only a potential for about 6k this year, and primarily in Q4, I'm not too concerned on this score. But it will be more important for 2020 to get this right.

Can I just adjust my taxes at dayjob to cover the estimated taxes on RI income? That would work for fed and state, but I don't think you can do that for medicare.

Would I be required to pay in the medicare taxes quarterly?

Any info or advice on this is appreciated!

[The Walk of the Penguin Mich]

I think you should spend the money and consult with a tax attorney to get the taxes on RI income straightened out.

JMHO 

[MN-Investor]

I've found this tax calculator to be quite good -

Dinkytown Tax Calculator for 2019

Try it out.

BTW, in the next week I'm going to reviewing some of the available online 2019 tax calculators for a presentation I'm doing Oct 12. If I find a better calculator, I'll post a link to it.

[phil5185]

In your opening you say that you want to "avoid doing that again".
Why?
Your 2019 tax bill is a fixed number as of Dec 31, does it matter to you whether you pay it monthly through out 2019? Or as a lump sum on April 15, 2020?
(Personally I prefer to pay mine in April.)

[MN-Investor]

Sept 28, 2019 13:20:12 GMT -5 phil5185 said:

In your opening you say that you want to "avoid doing that again".
Why?
Your 2019 tax bill is a fixed number as of Dec 31, does it matter to you whether you pay it monthly through out 2019? Or as a lump sum on April 15, 2020?
(Personally I prefer to pay mine in April.)

I think the problem Rukh is trying to avoid is an April 15 surprise of a large tax due.

When income and expenses are stable from year to year, most folks don't bother to do a current year tax calculation before year end. The tax due/refund stays within a narrow band.

Having a larger than usual balance due is not a big deal if you can anticipate and plan for it. I think that's what Rukh is trying to do now.

[Rukh O'Rorke]

Sept 28, 2019 14:35:25 GMT -5 MN-Investor said:

Sept 28, 2019 13:20:12 GMT -5 phil5185 said:

In your opening you say that you want to "avoid doing that again".
Why?
Your 2019 tax bill is a fixed number as of Dec 31, does it matter to you whether you pay it monthly through out 2019? Or as a lump sum on April 15, 2020?
(Personally I prefer to pay mine in April.)

I think the problem Rukh is trying to avoid is an April 15 surprise of a large tax due.

When income and expenses are stable from year to year, most folks don't bother to do a current year tax calculation before year end. The tax due/refund stays within a narrow band.

Having a larger than usual balance due is not a big deal if you can anticipate and plan for it. I think that's what Rukh is trying to do now.

Thank you, yes.

I also thought that the IRS didn't want people holding all that money until April, that you needed to pay quarterly taxes if you weren't being taxed via an employer.

And that you had to pay a certain percentage of the tax through the year, and you could owe 1-2k maybe, but if you were owing 10k on April, they wanted you to adjust and/or make quarterly payments.

is this not correct? Could I just put 31% into a money market account and then pay the next April?

[CCL]

If I were in your position I would withhold it from your regular paychecks.

You probably already know, but if you don't have enough withheld throughout the year, you may end up with penalties. Don't forget you will need to pay the full amount for SS rather than half.

[TheOtherMe]

Rukh said she is over the SS limit at her regular job so she will only owe Medicare tax.  

From the IRS website:

Taxpayers must generally pay at least 90 percent of their taxes throughout the year through withholding, estimated tax payments or a combination of the two. If they don’t, they may owe an estimated tax penalty.

I recommend Rukh see a professional to determine the amount.

[countrygirl2]

We had the same problem for several years, last year got it all back, that was a surprise.  Right now I'm hoping that we will have another low tax year is why we took out some IRA money.  I guess we will find out.  Next year I will pay estimates again.  I too don't want to end the year thinking some of the money is ours then find we have to pay it all to Uncle Sam.

  Would be nice to be able to fully depreciate a new jet in the year of purchase like some folks. The little guys like us gets trickle down deductions, LOL!  Damn.

[phil5185]

We had the same problem for several years, last year got it all back, that was a surprise. Right now I'm hoping that we will have another low tax year

Same thing for us - we usually owe over a $1000 in April, last year we got a refund, probably the first refund in over 20 years. That was the Trump tax break. 

[GRG a/k/a goldenrulegirl]

I’m confused. Is Rukh Inc. a real corporation? And you it’s only employee?

Or is Rukh Inc. just your term of endearment for your side consulting gigs done under YOUR legal name?