HELP! Tax Underpayment Received due to incorrect W-4, W-P4 and Self Employment

Forum|Forum|1 year ago
February 23, 2025
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For the 2024 Tax year, we are receiving a tax underpayment penalty due to the incorrect amount being paid in taxes. We need to update our W-4 and W-4P but I need clarity.

My husband and I are both retired and have a pension, I also work at a company and we both have our own LLC businesses. I need to submit a W-4 for the company I work for, correct? For the W-4P, do we need to include the income made from each of our businesses? He is a Sole-Proprietor and I have a LLC/Partnership and receive a K-1.

MAK70

Employers are required to withhold from wages and salaries. Pensions are not required to withhold, so the W4P is not required but helpful if you want to avoid the underpayment penalty. For the W4P, you do want to include not only the self-employment K-1 income, but the wages. It does take special planning because you have multiple sources of income.