Self-Employment Question

Start out with 2 and see how much they withhold for taxes( not SS). Multiply by the number of paychecks and see if it's enough to cover your full current year income, including self employment. If not, increase it to do that (or at least 90% of it), or if it's lower 100% (or 110% if your last year's AGI was over $150,000) of last year's tax. Then DO NOT pay an installment for the first quarter. Use the withholding to cover it and your SE taxes. Net result is you get the use for a full year what you would have paid for the first quarter. Invest it at 5%. The above is manipulating IRS form 2210 rules to your advantage. Read it.

Fill out the worksheet on the W-4 form to determine the appropriate number of exemptions for your situation then fill out the w-4 using that number of allowances. If you know about how much the taxes will be from your self employment (incl SE tax), you can divide that amount by the number of pay periods left in the year and put that amount on line 6 of the w-4 form.Then next year, remember to remove the line 6 amount by filling out a new w-4 with your employer.

The IRS web site has a withholding calculator that may help.