Estimated income is the amount of money you expect to make in a year. It’s helpful to estimate your income to withhold the right amount in taxes.
What is estimated income?
Your estimated income is the amount of money you expect to make in a year. Estimating your income helps make sure you don’t have too much or too little withheld for taxes.
If you withhold too much, then you may miss out on money during the year that you didn’t have to set aside for taxes (although you would get it back eventually in the form of a tax refund). If you withhold too little, then you may face a larger tax bill at the end of the year.
How to calculate your estimated income
Catch can help estimate your income so that you withhold the right amount for taxes. If the amount of money you earn varies from week to week or month to month, then calculating your average weekly or monthly earnings based on the past year can help lead to a solid estimate.
How Catch Can Help
Catch can help you set up the right withholding percentage. We’ll take you through a simple process to outline your gross income, deductions, credits, and other information that will affect your tax burden. We’ll then recommend a percentage to automatically withhold.
That way you don’t have to worry about setting the money aside yourself manually every time you get paid. You can set the percentage and forget it, and you can also adjust it if you need to anytime.
One other note on health insurance: if you expect your income to change and you also buy your own insurance through the federal or a state marketplace, then you may want to report the change. Doing so may change your health insurance bill. If you expect to earn less, for example, then your premiums might significantly drop. If you expect to earn more and you don’t report the change in estimate, then your end of year tax bill may be a big surprise. Catch makes it easy to report changes in circumstance.