Calculating taxes from both W2 and 1099 income

[Ohregano]

Edit: Thanks for the help/replies. I'm just going to wait until the CPA lets us know what is up. I didn't realize there were so many variables!
I had also originally said $135k. As I thought that was what my husband was making. I checked his pay portal and his annual pay was listed as $125,000.

DH works from home and currently makes $125k W2 income. On March 1 he will be starting a 1099 contract position with another company for $107k. We are talking with a CPA but don't know the numbers yet. He is already in the loop that DH was going to be working 1099. But last we spoke that was to be the only job. Well DH decided to keep both jobs for as long as possible so that we can aggressively pay our debts off. (That is another can of worms I'll be posting a case study about soon)
DH signed the contract today for the 1099 gig and hasn't yet reached out to the CPA. I'm trying to calculate our info for the case study, using the case study spreadsheet from the forum. However I cannot figure out how to accurately calculate our taxes. DH says we won't have to pay quiet so much on the 1099 since we are already maxed out on payroll for the W2 job. But I'm not sure if that is accurate or not. Also I know there are other taxes related to being "self-employed". We do have an LLC and will file the income as an s-corp, paying ourselves from that. I think I said that all correctly. I'm sorry if I got any of the lingo wrong.

[Sibley]

The tax bill is based on your income, deductions, credits, and tax rates. The amount you withhold or pay in estimated taxes during the year will determine how much you pay in or receive back when you file your tax return (total taxes less amount paid = amount due or refund). How much you pay in via w-2 withholdings vs estimated tax payments can vary, but then end total won't change.

I'm not going to comment on full time employment x2, beyond there's a reason why it doesn't generally end well.

Honestly, given the s-corp and the fact that you have a CPA, they're going to be your best bet. It is tax season, but it's early enough that if you give them all the info ASAP (today/tomorrow), they should be able to at least do a rough estimate for 2020 taxes.

[Ohregano]

I'm not going to comment on full time employment x2, beyond there's a reason why it doesn't generally end well.

This is not the first time he has done something like this. When he was still in the Army, he went to college full time and also had a part-time side gig. He is a workaholic. Now his work is as a software engineer. Current job is usually pretty lax and has unlimited PTO. New job is with a few people he has know for years. Also very lax, & in a computer language he has been learning & wanting to work with.

I'm really not too concerned. I do everything for him, short of cleaning & clothing him. I've even fed him while he is deep in some computer stuff. We have a unique relationship. We're both 100% okay with. I take care of him, the house, the kids. He works his ass off. I'm just glad we finally found MMM. We are only 30/35.  We are ready to be free from the debt cycle! 

[wbranch]

Yes, it is correct that he will be saving the social security portion of self employment tax (12.4%) on most of the 1099 income since his W2 job counts towards the limit. $137k for 2020. So probably minimal benefit with the S Corp for the short term as long as he has the high paying W2 job. 

[MDM]

I believe the case study spreadsheet works well for a sole-proprietor Schedule C filing (once one figures out the net Sch C income).  Don't know about S-corp, but would be willing to look, either via posts or PMs.

[Ohregano]

I believe the case study spreadsheet works well for a sole-proprietor Schedule C filing (once one figures out the net Sch C income).  Don't know about S-corp, but would be willing to look, either via posts or PMs.

I tried using the 2020 spreadsheet earlier today and had a hell of a time.  Some cells wouldn't calculate correctly. Every cell entered caused the spreadsheet to "think" for several seconds and froze the screen. It was very frustrating. I think I'll go off another posters recommendation and just hold out for the CPA to let us know what our dollars should look like tax wise. I'll just have to estimate for the case study I want to post. I'll just calculate the money as if there were no W2. At least that way it couldn't be any LESS money coming to us.

[MDM]

I believe the case study spreadsheet works well for a sole-proprietor Schedule C filing (once one figures out the net Sch C income).  Don't know about S-corp, but would be willing to look, either via posts or PMs.

I tried using the 2020 spreadsheet earlier today and had a hell of a time.  Some cells wouldn't calculate correctly. Every cell entered caused the spreadsheet to "think" for several seconds and froze the screen. It was very frustrating. I think I'll go off another posters recommendation and just hold out for the CPA to let us know what our dollars should look like tax wise. I'll just have to estimate for the case study I want to post. I'll just calculate the money as if there were no W2. At least that way it couldn't be any LESS money coming to us.

Interesting.

Was this in Excel?  Any other spreadsheets open at the same time?  It does contain some large table calculations (that is what drives the chart data) but what you describe is (fortunately) not normal.

I'm particularly interested in "cells wouldn't calculate correctly" - do you have examples?

Thanks!

[Ohregano]

I believe the case study spreadsheet works well for a sole-proprietor Schedule C filing (once one figures out the net Sch C income).  Don't know about S-corp, but would be willing to look, either via posts or PMs.

I tried using the 2020 spreadsheet earlier today and had a hell of a time.  Some cells wouldn't calculate correctly. Every cell entered caused the spreadsheet to "think" for several seconds and froze the screen. It was very frustrating. I think I'll go off another posters recommendation and just hold out for the CPA to let us know what our dollars should look like tax wise. I'll just have to estimate for the case study I want to post. I'll just calculate the money as if there were no W2. At least that way it couldn't be any LESS money coming to us.

Interesting.

Was this in Excel?  Any other spreadsheets open at the same time?  It does contain some large table calculations (that is what drives the chart data) but what you describe is (fortunately) not normal.

I'm particularly interested in "cells wouldn't calculate correctly" - do you have examples?

Thanks!

The one cell I remember off the top of my head is the state tax rate. It said something along the lines of putting the state postal code in. Such as OR. I did that and got an error in multiple cells. I am using a very basic Chromebook. I downloaded the spreadsheet and used the excel extension in the browser to open the spreadsheet.

[MDM]

The one cell I remember off the top of my head is the state tax rate. It said something along the lines of putting the state postal code in. Such as OR. I did that and got an error in multiple cells. I am using a very basic Chromebook. I downloaded the spreadsheet and used the excel extension in the browser to open the spreadsheet.

Best guess then is that the "excel extension in the browser" doesn't fully support Excel.  Sorry, fixing that is out of scope.

I have no vested interest in Microsoft, but Excel does seem more functional than Google Sheets, LibreOffice Calc, etc.

[Ohregano]

I have no vested interest in Microsoft, but Excel does seem more functional than Google Sheets, LibreOffice Calc, etc.

No worries. I got super overwhelmed with the amount of categories as well and just gave up on it.
I think I found an okay calculator that let me put in both the 1099 and W2 income. 
I just posed my case study. Terrified to see people's responses.

[mistymoney]

Edit: Thanks for the help/replies. I'm just going to wait until the CPA lets us know what is up. I didn't realize there were so many variables!

DH works from home and currently makes $135k W2 income. On March 1 he will be starting a 1099 contract position with another company for $107k. We are talking with a CPA but don't know the numbers yet. He is already in the loop that DH was going to be working 1099. But last we spoke that was to be the only job. Well DH decided to keep both jobs for as long as possible so that we can aggressively pay our debts off. (That is another can of worms I'll be posting a case study about soon)
DH signed the contract today for the 1099 gig and hasn't yet reached out to the CPA. I'm trying to calculate our info for the case study, using the case study spreadsheet from the forum. However I cannot figure out how to accurately calculate our taxes. DH says we won't have to pay quiet so much on the 1099 since we are already maxed out on payroll for the W2 job. But I'm not sure if that is accurate or not. Also I know there are other taxes related to being "self-employed". We do have an LLC and will file the income as an s-corp, paying ourselves from that. I think I said that all correctly. I'm sorry if I got any of the lingo wrong.

Is his w2 job ok with this? and the new contract?

If he can do is one thing, but the smallest error might be attributed to overwork and a conflict of interest to either party - even if the work product is not a conflict.

Has he explicitly cleared this with both employers?

[bacchi]

Edit: Thanks for the help/replies. I'm just going to wait until the CPA lets us know what is up. I didn't realize there were so many variables!

DH works from home and currently makes $135k W2 income. On March 1 he will be starting a 1099 contract position with another company for $107k. We are talking with a CPA but don't know the numbers yet. He is already in the loop that DH was going to be working 1099. But last we spoke that was to be the only job. Well DH decided to keep both jobs for as long as possible so that we can aggressively pay our debts off. (That is another can of worms I'll be posting a case study about soon)
DH signed the contract today for the 1099 gig and hasn't yet reached out to the CPA. I'm trying to calculate our info for the case study, using the case study spreadsheet from the forum. However I cannot figure out how to accurately calculate our taxes. DH says we won't have to pay quiet so much on the 1099 since we are already maxed out on payroll for the W2 job. But I'm not sure if that is accurate or not. Also I know there are other taxes related to being "self-employed". We do have an LLC and will file the income as an s-corp, paying ourselves from that. I think I said that all correctly. I'm sorry if I got any of the lingo wrong.

Is his w2 job ok with this? and the new contract?

If he can do is one thing, but the smallest error might be attributed to overwork and a conflict of interest to either party - even if the work product is not a conflict.

Has he explicitly cleared this with both employers?

The 1099 employer is really a client, like a plumber has customers; no need for approval from them.

E&O insurance is cheap for software developers. He's a prime candidate for it.

[Ohregano]

Is his w2 job ok with this? and the new contract?

If he can do is one thing, but the smallest error might be attributed to overwork and a conflict of interest to either party - even if the work product is not a conflict.

Has he explicitly cleared this with both employers?

Yes they both know. He was told over a year ago when he started with job #1 that they would give him a substantial raise after 1 year. As at the time they were not offering him what he wanted. But he was interested in the company and their product. Well turns out they offered him $5,000/year. Which is basically diddly. So he told them he would be looking for additional work. They are okay with it because they are a startup and cannot afford to pay him more.  Job #2 knows but doesn't really care. As another poster said, he is a contractor. Not an employee per se.