Originally Posted by
PNWFlyer
estimate what you will make next year including the retro check. Multiple that entire number by .34. Then figure out how much you are withholding every month and multiply by 12 and add what they withheld from retro. Subtract that number from the first. Then either increase withhold every month to make the number near zero or save that much to pay your taxes. This is a simple as it gets. This way you are not surprised and trying to find $69k to pay your taxes.
yes, multiplying by .34 is a bit much but it keeps the big surprises away.
do not pay taxes quarterly. Just save the money yourself until you have to pay. You have already given SWA a free loan, don’t give Biden one as well.
also, do not sell a house or anything next year that will net you a bunch of money. Your tax liability on it will be greatly reduced in 2025 when you don’t have the retro check jacking up your income.
I think this is a good technique, albeit a bit conservative.
Once you have a better grip on what next year is going to look like, go to the IRS withholding calculator. Have your paystubs and numbers handy. It will nail it down for you. I use it every year and achieve near zero nirvana each time.