Adjusting Withholding On Form W-4 When Earning Both W-2 and 1099 Income

If you earn both W-2 wages and 1099 income, adjusting your withholding on Form W-4 may be beneficial to help account for taxes (ex: self-employment and income taxes) owed on your 1099 income which are not ordinarily withheld.

Update/adjust your withholding on Form W-4 and submit it to your employer as soon as possible to maximize tax withholding so your aggregate withholding for the year satisfies your tax liability or meets safe harbor rules.

If you don’t anticipate sufficient tax withholding to satisfy your tax liability or meet safe harbor rules, you may need to make appropriate estimated quarterly tax payments to avoid underpayment penalties.

Keep in mind Form W-4 only applies if you have W-2 wages. If your income is predominantly through self-employment (1099 or other pass-through income) with no W-2 wages, you’ll need to make appropriate estimated quarterly tax payments.

Consult with a reputable CPA or tax professional for appropriate tax guidance aligned with your tax situation.

It’s wise to keep your CPA or tax professional apprised of any material changes to income over the course of the year. Your CPA or tax professional may recommend appropriate adjustments to help mitigate against year-end surprises.

Be proactive, not reactive!