Hi, I've done a few side projects this year, in addition to my FT W-2 job (I've switched those twice this year....am in a good one now!). Do I need to pay quarterly taxes, or can I just pay on what I may potentially owe in the late winter/early spring 2022 for the 2021 tax year? Also, can I claim my apartment as a deduction, since I work from home....entirely? 'Hope that makes sense.
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Hello talia19!
Thank you for your question(s). If you feel that your federal taxes that have been withheld from your paychecks (full-time W2 job) are not sufficient to cover the taxes that you owe for both your full-time job and the side projects, it is advisable for you to pay quarterly income taxes to the IRS in order to not be penalized with an underpayment penalty. Estimated taxes are paid on a quarterly basis - April 15, June 15, September 15 of the current year, and January 15 of the following year. So for your 2021 taxes, you can skip the final payment due date of January 15, 2022 if you will file your return and pay all of the tax due by February 1, 2022.
Please refer to the link below regarding paying estimated taxes:
https://turbotax.intuit.com/tax-tips/small-business-taxes/estimated-taxes-common-questions/L1luHqVdl
As for deducting your home/apartment on your taxes since you work from home, your home office must be the primary area where your business activities take place. You can only deduct the area in your home that you use exclusively and regularly as an office for conducting your business. Some of the home-related expenses that you are able to deduct include a portion of your mortgage interest, property taxes, homeowners insurance and some utilities. Please review the articles below for more information regarding working from home and setting up a home office:
https://turbotax.intuit.com/tax-tips/small-business-taxes/setting-up-a-home-office/L52go3hc0
Please let me know if this answers your questions, or if I can be of further assistance.
Thank you!
Shirleyh88
Hi talia119,
Congratulations on finding a good job! Since your question is twofold, let me address each one separately.
QUARTERLY TAXES:
Regarding the quarterly estimated taxes, the general rule is that you must pay as you go. Meaning that when you file your tax return, if you haven't paid enough taxes through withholdings or estimated tax payments then you might owe an underpayment penalty.
To determine whether you need to make quarterly estimates, answer these questions:
If you answered "no" to all of these questions, you must make estimated tax payments using Form 1040-ES. To avoid a penalty, your total tax payments (estimated taxes plus withholding) during the year must satisfy one of the requirements above.
HOME OFFICE (apartment as a deduction):
I am unclear if you are asking about your apartment as a deduction for working from home entirely with your W-2 job or with the self-employment freelancer business.
First, if you are working from home as an employee, you can not take the home office deduction, even if it is entirely remote.
Second, if you are referring to your freelancing self-employment situation, you may be able to claim a portion of your apartment if it is used regularly and exclusively for your freelance business and is also your principal place of business. Please note that if you have a home office in your apartment and you use it for both your W-2 job and your freelancing side hustle, it is NOT a home office deduction because it is not exclusive to your business.
Here are two additional links that provides some additional information regarding the home office deduction.
Can I take a home office deduction? https://ttlc.intuit.com/community/credits-and-deductions/help/can-i-take-the-home-office-deduction/0...
and
What does regular and exclusive use mean? https://ttlc.intuit.com/community/business-expenses/help/what-does-regular-and-exclusive-use-mean/00...
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