If I have normal W-2 income that I elected to have taxes withheld from, do I need to factor it into calculating my quarterly taxes?
>>62509230No. Your quarterly estimated payments are foe your capital gains and shit. Withheld W-2 income is the one damn thing people can't mess up.Most of the time people get into hot water because have some windfall income that didnt have any witholding attached and then at the end of the year it's all been spent and they're like "Woah, i have a liability wtf?" Then they either dont claim the income or dont pay the bill, which then gets them audited and fucked more with penalties and shit.
>>62509230you have to pay the lesser of 90% of current year tax liability or 100% of prior year tax liability, divided by four into quarterly payments. this requirement extends to all taxable income, meaning your w-2 withholding as well as non-w2 income.
>>62509230>>62509467>>62509521The US tax code is literally some of the most convoluted, evil, disgusting shit I've ever seen. No, I'm not being hyperbolic.Scenario 1:>Make $70k/yr>Pay $10k in taxes>Owed $8k>Get $2k back>Qualify for Safe Harbor>Make $500k in Capital Gains next year>Still earn $70k/yr>Safe Harbor protects you because your W2 withholdings covered 100% of the prior years withholdings.Scenario 2:>Make $70k/yr>Pay $10k in taxes>Owed $8k>Get $2k back>Qualify for Safe Harbor>Make $500k in Capital Gains next year>Income drops to $40k/yr>No Safe Harbor protection, because your income withholdings fall short of 100% prior coverage. You now owe a quarterly payment of about $4k - $5k before January 15, or you'll be penalized for "hiding your taxes from the IRS".
>>62509230Oh, to answer your question. Yes. It'll lower your quarterly tax payments.You could also raise your W2 withholding so high that it'll cover your yearly tax estimate and you won't need to make quarterly payments at all.
>>62509767>>62509767>>Safe Harbor protects you because your W2 withholdings covered 100% of the prior years withholdings.You're right it's all straight retarded, but this helped a bit. Thank you. Basically, I'm trying to best strategize how to not fuck myself if I hypothetically cashed in a lot of capital gains.
