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Best way to maximize paycheck when considering tax deductions for Colorado?
I work in real estate and have the unique option of choosing which leases I bill for on each of my pay checks (bi-weekly). For instance, if I have a good month I can either bill for all the sales that month or roll some of the leases over to the next month (in case I don't have as good a month). My question is what is the best way to maximize my "take home" pay when considering tax deduction (fed/state/SS). Example: If I get 6 leases worth $2100(month) taxes will take $619. If I roll a few of the leases over to the next month and bill $1300 taxes will take $321.
Public Comments
- You need to read Colorado's version of IRS Publication 15 to calculate the amount of taxes withheld based on your W-4. Either way, it will all wash out in the end when you file your tax returns. Whatever happens, don't owe too much when it comes time to file your taxes. If you do, then you will be subject to the underpayment penalty.
- First, you should consider incorporating. For your situation now, from the IRS: Who Must Pay Estimated Tax If you had a tax liability for 2007, you may have to pay estimated tax for 2008. General Rule You must pay estimated tax for 2008 if both of the following apply. You expect to owe at least $1000 in tax for 2008 after subtracting your withholding and credits. You expect your withholding and credits to be less than the smaller of; 90% of the tax to be shown on your 2008 tax return, or 100% of the tax shown on your 2007 tax return. Your 2007 tax return must cover all 12 months. Sole proprietors, partners, and S corporation shareholders - You generally have to make estimated tax payments if you expect to owe tax of $1,000 or more when you file your return. Use Form 1040-ES, Estimated Tax for Individuals, to figure and pay your estimated tax. For additional information, refer to Publication 505, Tax Withholding and Estimated Tax. You should send in estimated tax. You should go over the last 3 years if you do not already know your successful and sparse months. After doing that, figure how well you do from Jan - June and July - Dec. Send in estimated tax every quarter. Send in a little less than 25% of your annual income tax liability in the first two quarters { IRS rule by April 15 and June 15}. You will have more to invest this way. In the remaining two quarters, send in enough so that you do not get in trouble per their requirements noted above. There is no such income tax law nor form of the "Colorado version of the IRS". You probably already know what you need to pay for Colorado. Just follow the advice given aforehand to maximize your available cash for investments.
