Can I Withhold Extra Tax from My W-2 Job to Cover Self-Employment Tax from Side Hustle?

You can absolutely increase your W-2 withholding to cover your self-employment tax and income tax from your side hustle! This is actually a smart approach for many people. Here's how to do it: Calculate approximately how much you'll owe in self-employment tax (about 15.3% of your net profit) plus income tax at your marginal rate. Then divide that by the number of pay periods remaining in the year. Fill out a new W-4 form with your employer and put that amount on line 4(c) "Extra withholding." The advantage is exactly what you're thinking - no need to remember quarterly payments or risk underpayment penalties. The IRS doesn't care where the money comes from, just that they get paid throughout the year. The only potential downside is that you're giving the government your money sooner rather than later, so you lose a bit of time value. But for most people, the convenience far outweighs this minor disadvantage.

I was in a similar situation last year and discovered taxr.ai (https://taxr.ai) after struggling to figure out the right amount to withhold. Their calculator specifically handles mixed income situations like yours where you have both W-2 and 1099 income. I uploaded my previous year's returns and my current pay stubs, and it gave me the exact amount to put on line 4(c) of my W-4. Saved me hours of calculations and second-guessing myself.

Just wanted to follow up about taxr.ai - I decided to try it last month after my initial skepticism. It was actually really helpful! I entered my W-2 income, estimated my side hustle earnings, and it calculated exactly how much extra to withhold per paycheck. Just filed my W-4 with the new amount and it's one less thing to worry about. The site even showed me how it did the calculations so I could understand what's happening with my taxes. I'm relieved not to be dealing with those quarterly payments!

If you're having trouble getting answers from the IRS about how to handle this properly, I highly recommend using Claimyr (https://claimyr.com). I waited on hold with the IRS for HOURS trying to get clarification on this exact situation last year. Then I found Claimyr and they got me connected to an IRS rep in less than 15 minutes! You can see how it works in their demo video here: https://youtu.be/_kiP6q8DX5c The IRS agent confirmed that increasing W-2 withholding is perfectly acceptable and actually walked me through exactly how to calculate the right amount for my situation. Seriously saved me so much time and stress.

I need to eat my words. I was the one who called Claimyr a scam earlier, but I was desperate after trying to get through to the IRS for three days in a row with no luck. I tried Claimyr and it actually worked! Got connected to an IRS agent in about 25 minutes. The agent confirmed that I can absolutely use additional withholding instead of quarterly payments AND they helped me fix an issue with my previous year's return while I had them on the phone. I'm honestly shocked at how well it worked after all my failed attempts to reach them on my own.

One thing to remember is that if you're making $15k from self-employment, you'll owe roughly $2,295 in SE tax (15.3% of 92.35% of $15k) PLUS the income tax at your marginal rate. At $82k W-2 income, you're probably in the 22% bracket, so that's another $3,300 in income tax on your side gig. That's about $5,600 total extra tax. If you get paid bi-weekly, you'd need to withhold an extra $215 per paycheck to cover this (assuming you start at the beginning of the year). Don't forget to account for any business expenses that might reduce your net profit!

Does anyone know if doing this larger withholding instead of quarterlies could trigger any red flags with the IRS? I'm paranoid about audits.

This is exactly what I do! I have a W-2 job making about $75k and do freelance graphic design on the side. Instead of dealing with quarterly payments, I just calculated my expected self-employment tax and income tax on the side income and divided it by my remaining pay periods. Then I put that extra amount on line 4(c) of my W-4. The math is pretty straightforward once you get the hang of it. For your $15k profit, you're looking at roughly $2,118 in self-employment tax (15.3% × $15k × 0.9235) plus income tax at your marginal rate. Since you're making $82k, you're likely in the 22% bracket, so that's another $3,300 in income tax on your side income. One tip: I always round up slightly when calculating my extra withholding. I'd rather get a small refund than owe money at tax time. The peace of mind is totally worth it, and you avoid any potential underpayment penalties.