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Quarterly tax help for a moonlighting resident?

Home Tax Reduction Quarterly tax help for a moonlighting resident?

  •  cajundoc 
    Participant
    Status: Physician
    Posts: 10
    Joined: 12/22/2018

    Hey guys, hoping someone can give me some straightforward directions as to how to file quarterly taxes for some moonlighting pay I’m making on top of my house officer salary. Are there a few simple steps to doing this or can someone point me to the right WCI post or link which can make this simple? Is there a step by step guide a-la WCI’s backdoor Roth post? Thanks!

    The common denominator of success is forming the habit of doing things failures don't like to do.

    #189699 Reply
     Peds 
    Participant
    Status: Physician
    Posts: 2699
    Joined: 01/08/2016

    Just increase your W2.

    #189700 Reply
     cajundoc 
    Participant
    Status: Physician
    Posts: 10
    Joined: 12/22/2018

    Meaning what? Tell my employer to withhold more taxes? If so, how much?

    The common denominator of success is forming the habit of doing things failures don't like to do.

    #189701 Reply
    abds abds 
    Participant
    Status: Physician
    Posts: 153
    Joined: 01/16/2017

    Google “estimated taxes.” Click on the irs.gov link. Pay estimated taxes.

    Alternatively, if you meet a safe harbor (to avoid a penalty), just save 40% of your pay in a high interest savings account and pay your taxes in a year from that.

    #189704 Reply
     cajundoc 
    Participant
    Status: Physician
    Posts: 10
    Joined: 12/22/2018

    Google “estimated taxes.” Click on the irs.gov link. Pay estimated taxes.

    Alternatively, if you meet a safe harbor (to avoid a penalty), just save 40% of your pay in a high interest savings account and pay your taxes in a year from that.

    Click to expand…

    Thanks for the instructions. So the tax rate on 1099 pay is 40%?

    The common denominator of success is forming the habit of doing things failures don't like to do.

    #189705 Reply
    abds abds 
    Participant
    Status: Physician
    Posts: 153
    Joined: 01/16/2017

    Google “estimated taxes.” Click on the irs.gov link. Pay estimated taxes.

    Alternatively, if you meet a safe harbor (to avoid a penalty), just save 40% of your pay in a high interest savings account and pay your taxes in a year from that.

    Click to expand…

    Thanks for the instructions. So the tax rate on 1099 pay is 40%?

    Click to expand…

    No. It will be regular tax brackets (which will likely be 22-24% depending on how much you make in addition to your resident salary) plus self-employment tax (medicare and SS). 40% is a safe number in my opinion so that you will have enough, probably extra, with little risk of having too little in the account to pay your taxes this time next year.

    #189732 Reply
     spiritrider 
    Participant
    Status: Small Business Owner
    Posts: 1435
    Joined: 02/01/2016

    Any tax liability on the 1099 income will be your marginal fed/state/local income taxes + SE taxes + any additional Medicare taxes on the business profits.

    #189746 Reply
    jsr52 jsr52 
    Participant
    Status: Physician
    Posts: 157
    Joined: 03/20/2017

    I save 30% of my moonlighting pay for quarterly taxes, if you are a house officer I bet your effective tax rate is 20-24%, 30% should be fine.

    #189759 Reply
    abds abds 
    Participant
    Status: Physician
    Posts: 153
    Joined: 01/16/2017

    +15% SE tax
    +state/local tax

    Save more than 30%.

    #189770 Reply
    ENT Doc ENT Doc 
    Participant
    Status: Physician
    Posts: 2510
    Joined: 01/14/2017

    You will overpay if you do FICA + Marginal Fed + Marginal State as a resident.  The calculation also depends on your deductions – whether you are contributing to a pre-tax solo-401k, 1/2 SE tax, and the QBI deduction (which is also dependent on the pre-tax 401k contribution as we’ve found out).  I would do a mock 1040 for 2019 based on your projected W2 earnings and withholdings (and any additional income not mentioned like Dividends, Interest, etc) and then see what the marginal effect is of adding each dollar of moonlighting money, which will incorporate all above factors.  Quarterly payment = marginal tax effect of your quarterly income.

    #189778 Reply

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