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Your income is up significantly. One safe harbor to avoid federal underpayment penality is for you to withhold 100% (or a 110% if income is over $150,000) of your previous years tax liability. You will need to check your state for state tax requirements. Another federal safe harbor is less than $1,000.

As long as you are prepared to write a significant check for taxes in April, it is likely unnecessary for you to increase federal withholding.

Both federal and state accept quarterly estimated tax payments. Since your income is variable, you could make additional quarterly payments.

Debra
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