Have started making around 80k a year in dividends and had me thinking should I be paying quarterlies? Wife and I have a W2 job but we always owe and mark 0 dependents (we have 4) and a few years ago I got a penalty for not paying enough in. We’ll be well over any limits for paying little taxes. Probably be in the 24%-28% range.
A lot of the dividends will be a ROC. And before people start asking got 400k in a NEOS funds SPYI, XSPI, and XQQI and the bulk other 90% in other indexed investments.
Do any of you pay quarterly estimated taxes on your dividends?
byu/Glum-Year-7577 intax
Posted by Glum-Year-7577
10 Comments
No.
No. I cover the safe harbor amount through withholding and don’t worry about it.
If you have a W-2 job you should be able to withhold enough to hit the safe harbor
If ordinary dividends. I would. Try it for a year and see where the numbers line up. Id rather have a refund then owe the penalty.
If your withholdings can’t cover your estimated tax liability wouldn’t making estimated tax payments be a reasonable thing to consider?
You’re asking if anyone pays quarterly taxes on investment income? Uh yes there are lots of people who do. While working a W2 job you get a choice to pay estimates or adjust withholding.
Look at line 24 of your 2025 1040. If you are W-2, withhold 100% of line 24 from your paycheck for the entire year. 110% if your 2025 AGI was > $150k. If you don’t have withholdings, then make 4 equal estimated tax payments that is 25% of that number.
You can annualize your income to make quarterly payments based on the actual dividends received. But you will likely have to guess at the qualified dividend amounts vs ordinary (total) dividends. Safe harbor based on last year’s taxes is just easier. You might want to annualize if 2025 was an unusually high tax year that won’t repeat or your financial situation is such that you need to pay taxes on actual income made.
On my W4 it asks if I want to withhold any extra, I put the additional amount there. That way I don’t have to do any further estimating.
If you expect to owe more than $1,000.
Pay quarterly estimated taxes; use form 1040-ES. Maybe state estimated taxes too.
I have 1099 side income in addition to my W-2 job. I just withhold extra to compensate for the added taxes. You should be able to do something similar for your dividend income.