Estimating taxes on 1099 income with W2 income
Quick background, I'm a physician in a multi-physician practice owned by a major practice management company. I have a salaried position + production bonus that comes in as W2 income. My wife and I are having difficulty with getting pregnant and so are starting infertility treatments.
In order to pay for said treatments, I will be picking up some extra shifts at a different hospital (locum tenens) that will be 1099 income. Because it's going to a specific use, I need to maximize the cash flow in the immediate short term - so not looking to put any money in any tax sheltered accounts.
Having a hard time figuring out however what amount I should be keeping aside for taxes? Online tools I've seen don't seem to handle the W2 income very well. Just save something equal to what will be my marginal rate? More? Less? Set up a pass through (is this even an option if I also have W2 income?)?
I obviously don't want to run afoul of the IRS and pay the estimated taxes on time, but really want to have maximal availability of funds in case things get really expensive.
Thanks.
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Chris,
Joe's table helps. but think this way: there are two ways you can pay the taxes for your side-gig: either you can send a check quarterly to the Feds, OR, you can overwithhold at your real job to cover taxes at your sidegig. I'd do this in "arrears" -- after you get your first paycheck from sidegig, then adjust your real job's withholding.
Except (and Joe neglected this), you're still responsible for Social Security / Medicare Tax from your sidegig. I suspect your income at real-job is high enough that you stop paying Social Security Tax, so at least at this time of year you won't be subject to 15.4% Social Security Tax. However, that's NOT true for the 2.9% Medicare Tax. Remember that because you're an independent contractor being payed without withholding, YOU are responsible not only for the Medicare (and Social Security) taxes you'd be responsible for if a regular employee, but you're also responsible for what your employer's share as well.
From my blog's discussion on 2017 tax rates.
This is the final set of numbers. So, if you currently have, say 0K taxable income, every dollar above that starts getting taxed at 25%, until 3K, then 28%.
In other words, forecast your taxes based on the day job, but then the 1099 goes on top of that.
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