Question

Estimated taxes and changes in income

Forum|Forum|2 years ago
March 5, 2024
1 reply
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Hi,

So I typically pay estimated taxes since I'm self employed, but this has now changed.

My income for the month will be very low and I will be transitioning to W2/salary shortly.

How do I calculate how much I need to pay for my estimated taxes? Can I reduce it based on the fact it won't be the same for the first quarter (compared to last year)?

M

MinhT1

The payment of estimated taxes is optional. You can opt not to pay or reduce the amount paid.

If your self-employed income before you transition to W-2 employee is very low, you can reduce the amount of estimated taxes you pay for the first quarter (due on April 15, 2024), or opt to not pay it.

You'll not owe the penalty for underpayment of estimated taxes if at tax time you owe less than $1,000 in tax after subtracting your withholdings and credits. See this IRS document.

Also make sure that you fill out Form W-4 correctly to help ensure correctly to help ensure that tax withholdings are calculated correctly.

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