I’ve directly paid the trust’s tax liability for years which I think is technically wrong like you say but seems a little pedantic. I also do the return and at the end of it my mom (the trustee) has to sign so I sometimes remind her that it’s not my neck on the line if it’s wrong…
I finished my 2022 taxes (finally got the brokerage’s tax summary in), and…
$0 refund; owe $0.
I gotta check the math. There’s no way I hit perfection.
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I had to pay my state $1 this year. Federal refund of something like $80. Not too shabby, but not that good!
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Perfect if you were in PA, as if you owe $1 or less you don’t have to pay. In theory I could do all the calculations to determine that I owe $X, make an additional estimated tax payment of $X - 1, and save a buck. Never have.
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i owe the feds $3600. I get back $2400 from the state. want to finalize it tonight before i forget.
since mrs f believes every year should match our biggest refund ever, i have to document why we aren’t matching it. fortunately the software helps with that.
Sounds like -3600 is a pretty big number to me.
Think I’m getting back about 1,500 from Federal and 1,250 from State.
it is. fortunately the state will offset 2/3 of it and the net is a owing 1200. anyway, i prefer getting some back so had to change some things to be better prepared for next year.
I say this to my VITA taxpayers and I’ll say it here: if you haven’t filled out a new W-4 since 2018 when TCJA went into effect your employer has almost no chance of withholding an appropriate amount.
And if you and your spouse both have jobs, make sure to check the box for “Married Filing Separately” regardless of how you will actually file. They used to call this “Married but withhold at the higher Single rate” which was a little confusing and since TCJA they decided to make it even more confusing!!!
The choices should be
- Single or Married with a working spouse
- Married with a non-working spouse or Qualifying Widow(er)
- Head of Household
The choices actually are
- Single or Married Filing Separately
- Married Filing Jointly or Qualifying Widow(er)
- Head of Household
I don’t know why they expect lay people to understand how to translate the two. If you’re married and you have a working spouse and you always file jointly it looks like you should choose option 2, but you should absolutely choose option 1.
Stupid IRS form!!!
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I’m probably gonna owe a lot this year.
Bonus is more than I thought
Now I suppose I should add that if you are making $500,000 a year and your spouse is pulling in $4,500 annually from a hobby job then sure, go ahead and say “Married Filing Jointly” (what I call “Married with a non-working spouse”) because at that point your spouse’s income is a rounding error compared to yours and you’re closer to 1 job than 2.
But if your spouse makes the same order of magnitude that you do or you want to avoid owing, just say Married Filing Separately on the W4. It’s the safer option. Then file your taxes jointly or separately… however works out better.
Edited to clarify what Married Filing Separately referred to.
Baller alert! looks like the bosses valued that 5th hour you put in each week!
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I have income from 2 non-day job sources. One withholds some but not enough. other is a 1099 thing. Not a huge amount, but it adds up.
Wife dusted off her side hustle again and that is all cash/sole proprietor. Will be the last year we have that, as we will move her to getting an EIN and she can open a solo-401k and dump it all in there.
In all my work experience, bonus has never been proportional to my actual performance. Most of my past coworkers agree. This is especially true once you’re past analyst level where work is more measurable.
Yeah if you have material income that’s not from wages then you need to either do the Step 4 on the W4 form to have extra taxes withheld from your paycheck, or you need to make estimated payments.
On the federal level for Schedule C income your estimates would be your marginal tax bracket PLUS 14.1% times your estimated income.
That’s if the additional income will be subject to the standard Medicare & Social Security. If it’s exempt from Social Security and/or you’re in Additional Medicare territory then you’d need to adjust the 14.1% up or down. [92.35% of 2*(6.2% + 1.45%) ~ 14.1%]
Then you might have state and/or local taxes on top of that.
15.3% for self-employed SS and Medicare. your maths are off a touch
and i adjusted to have more withheld per step 4.
Naw, for self-employment earnings you don’t have to pay the FICA tax on the Employer share of the FICA tax. If you’re in the standard 6.2% and 1.45% then you multiply your Schedule C bottom line by 92.35% first.
The math isn’t quite right because they’re too dumb to do it right. But it’s pretty dang close.
If you earn $100,000 from your employer you pay $6,200 Social Security and $1,450 Medicare. But so does your employer. So your employer actually spent $107,650 on you. $100,000 in wages plus another $7,650 in Employer FICA taxes.
If you have $107,650 of Schedule C earnings the first thing that happens is that you multiply by 92.35% to net out the Employer FICA.
Except as every good actuary should know… you obviously shouldn’t multiply by .9235 you should divide by 1.0765. Whether this gem is due to the innumeracy of Congress or the IRS, I couldn’t say, but that’s how it’s calculated.
The logic is sound, but the math isn’t. The math is close though, and it works out to about 14.1% of your Schedule C earnings. Half of which also becomes a front-page deduction, again, representing the Employer share of the FICA tax.
So possibly beating a dead horse… if I have $107,650 of self-employment earnings, I multiply it by .9235 to get $99,415 (after rounding). 15.3% of $99,415 is $15,210 (after rounding). Half of $15,210 is $7,605.
So my Schedule C income is $107,650, I get a front page deduction of $7,605 bringing my AGI to $100,045 and my SE tax is $15,210.
Note that $15,210 is roughly 14.1% of $107,650.
If the taxes were calculated numerately my Schedule C would be $107,650, my AGI would be $100,000 and my SE tax would be $15,300. But they’re not. My income is $45 too high and my SE tax is $90 too low. If my marginal tax rate is 24% then their innumeracy saves me $80… $10 too much to the treasury and $90 too little to Social Security & Medicare. 
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When it comes to fixing Social Security & Medicare, a relatively painless fix would be correcting that. It only makes about 0.1% difference to self-employed folks, so it won’t have a huge impact or anything.
But it’s obviously wrong and it’s hurting the solvency of the program.
Maybe that only buys us an extra month until they run out of money but… why not take it?
you’re getting back -3600 from federal. I was suggesting you tell your wife that to satisfy her need to get a “big number back” from the feds. 