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Adjust withholding

Submitted by Philip Brewer on March 26, 2008 - 08:01.

If you've got a regular job that's withholding taxes, you can usually just adjust the amount being withheld to cover what you're earning. The second page of the W-4 form has instructions for people with a second job.

If your income is highly variable, though, Publication 505 Tax Withholding and Estimated Tax (that I linked to above), has the gory details for figuring out if you need to withhold extra.

It's hard to actually provide a rule of thumb, because the dollar amounts can be so different from one person to the next. As long as you weren't short last year (and you have at least as much withheld this year as you owed last year) you're safe from penalties. But, if your freelancing income starts small and then grows over the course of the year, you could find yourself owing a surprising amount to the government--a surprise that can be unpleasant, even if they don't tack interest on top.

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