And if your life situation changes or the incoming government fucks around with the tax codes, your estimating will be off.
That’s kinda what quarterly estimated taxes are for. At the end of every quarter, if things aren’t lining up and your estimates were too low, you can pay extra tax to bring things in line.
The estimate doesn’t have to be too precise though. At long as you pay at least 90% of what you owe this year or 100% of what you owed last year (whichever is smaller), you’ll be fine. Any less than that and you’ll be hit with an underpayment penalty.
It’s better to owe money rather than get a refund, as long as you pay enough to avoid the underpayment penalty.
I get that it’s ideal to owe, but I would rather a refund of a couple hundred dollars than owe a couple thousand. Part of the issue is inconsistent income, though. If it was just a single flat salary for the entire year that should be simple, but when you add in variable pay rates and shift differentials and shift bonuses it all gets messed up.
That’s kinda what quarterly estimated taxes are for. At the end of every quarter, if things aren’t lining up and your estimates were too low, you can pay extra tax to bring things in line.
The estimate doesn’t have to be too precise though. At long as you pay at least 90% of what you owe this year or 100% of what you owed last year (whichever is smaller), you’ll be fine. Any less than that and you’ll be hit with an underpayment penalty.
It’s better to owe money rather than get a refund, as long as you pay enough to avoid the underpayment penalty.
I get that it’s ideal to owe, but I would rather a refund of a couple hundred dollars than owe a couple thousand. Part of the issue is inconsistent income, though. If it was just a single flat salary for the entire year that should be simple, but when you add in variable pay rates and shift differentials and shift bonuses it all gets messed up.