The trick is to find the sweet spot, where you withhold just enough to avoid the underpayment penalty. ("Safe harbor"). We always aim for having 90% + 500 cushion withheld from this years earnings, although there are other ways to achieve safe harbor that include paying 100% or 110% of last years taxes withheld, which might work better if your income is significantly increasing every year. That way, you are getting the max amount of your earnings paid to you instead of giving an interest free loan to the government in order to get a refund of excess taxes paid. This year, our total tax bill is close to 29.5. We had just under 27k withheld, so avoid the under payment penalty by about 500.
Statistics: Posted by capran — Sun Mar 03, 2024 3:40 pm — Replies 37 — Views 2249