Some background info:
- My disability benefits aren't taxed upfront for federal so I made my first estimated tax payment of $5920 in April and am making the second one in early June.
I will receive disability benefits in June and will have to repay them to the private insurer and SSA. This will happen cause they keep paying benefits till they review my pay stubs, so repayment is inevitable. The monthly disability benefits should stop by end June.
I filed married filing separately in 2021, and am going through a divorce which may or may not be signed by the courts in 2022 -- major delays with the courts due to Covid. I always take 0 withholding allowances.
My 2021 taxes were very different from 2022 -- disability benefits all year vs part disability and part job income this year, plus last year I had a huge claim to right credit for about $36k in disability overpayment from 2020.
2021 refund was:
Fed refund $1748
State refund 3541
- INCOME:
Quarters 1 and 2: private disability benefit totaling $30.5K, SSA disability benefit totaling $15.5K - no tax withholding on either but Q1 and Q2 estimated tax payments will cover that
Quarters 3 and 4: job income totaling $102K ($126k gross minus 401k max of $20,500, $2k FSA, $1k for disability benefits buy-up, $0 for insurance bc at least for now I'm staying on my spouse's plans); For simplicity's sake, I didn't account for any disability overpayment or my repayment, but for that I'll elect a claim of right credit.
In addition, I expect $22k in ordinary dividends ($18,500 in qualified dividends taxed at 15%, $3,500 in non-qualified dividends taxed at 24%), $500 in interest income, $500 in foreign tax credit, $700 in net investment income tax
Qualified dividends subject to 15% tax rate: $18,500 x .15 = $2775 in taxes owed
Fed taxes owed: $27304 marginal income tax + $2775 qualified dividends + $700 net investment income tax - $500 foreign tax credit = $30,279
Taxes withheld: $26,100 ($11,840 estimated tax payments ($5920x2) and $14,300 job paycheck withholding ($894 fed income tax withheld per pay check x 16 checks for rest of year (married filing jointly, zero allowances))
Expected tax liability: $4179
Outcome: There are 16 paychecks left for 2022 at my new job, so elect $262 federal addtl withholding
NY STATE PROJECTION:
- My projected income is $170,500 (includes qualified and non qualified dividends) - $8K NY standard deduction = $162.5K - $15,440 SSDI income which isn’t taxable by NY = $147,060
NY taxes owed: $8283 (income tax using NY tax brackets - $500 foreign tax credit)
Taxes withheld: $14,375 ($875 per month private disability pay x 5 months, an estimated $350 for final private disability check issued at end May, $9650 paycheck withholding for NY and NYC using single zero),
Expected refund: $6,092
Thanks
Aguilar