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  • Safe Harbor Question

    I'm trying to figure out if I need to file/pay quarterly estimated taxes this year. I started working after residency in January. Q1 was all income from W2. Q2 has been all 1099 income. I anticipate the remainder of the year to be a mix of 1099 and W2, but more so 1099 income. I am married, spouse is an attending several years into practice making W2 income. Our 2019 AGI basically was made up by his salary. The majority of my resident income went into tax-protected retirement accounts (401a, 403b, 457). If we pay at least 110% of last year's tax this year via W2 withholdings will I be in the safe harbor? Does that mean I do not need to also submit quarterly estimated tax payments? I am keeping 40% of my 1099 income in reserve in a high-yield checking account for the eventual tax bill of course. Thanks!

  • #2
    Safe harbor is the lesser of a) 90% of current year tax liability or b) 100% of prior year tax liability (110% for MFJ AGI >$150k)

    so, if 2020 income is going to go up vs 2019, your safe harbor is probably b) from above.

    next step, can you meet that safe harbor entirely through W2 withholding in 2020? One or both jobs. It can even be through increased W2 at year end.

    if the answer is yes, then you don’t need to make any estimated payments

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    • #3
      Yes I can meet the withholding via W2. This confirms what I was thinking, no estimated payments. Thanks!

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