Today, with so many millennials freelancing on the side while working a salaried job, the IRS wanted to reduce the risk of sticker shock when taxes are due on the W-2 income as well as the additional self-employment income. To solve this challenge, the Internal Revenue Service issued the new Tax Withholding Estimator tool. To get to the results page, you will need to complete 5 pages of a handful of questions per page. The 6th page yields the estimated amount you will owe or be due at the end of the tax year. If you will owe, you can click the button to find out how to get the amount due closer to zero. One click will bring up line by line instructions on a new W-4 which you can give to your employer, so the correct amount is taken out each time. If you want to overpay so you get a refund, there is a separate button to click for that.
It is easy and straight forward. If your side gig is taking away your tax refund happiness, grab your most recent paystub, check what you are on track to earn from your job, then what you are probably going to earn from your freelancing, and click on the tool link here. I did it, and I have to go turn in my new W-4 now.
Contributed by Jo Gardner for PersonalTaxPrep.com