Increasing W4 withholdings in order to pay for taxes on a gig job.

[labaholt]

My wife and I are full time state employees. We file taxes jointly every year. My wife has a semi-regular gig on the side in keeping dogs for a fee since her job is fully remote. We anticipate she will make around $3000 for the year 2022 from this gig. According to information we have gathered, taxes should be paid quarterly on this income or, as an alternative, higher federal and state withholding can be set with W4 forms through our employer. Is this correct?

Since we are filing jointly, can I increase my federal and state withholding on my earnings to account for the taxes to pay on her gig income?

Thanks a lot for any ideas.

[AamilD]

Yes, that is correct. For the $3000 income from the gig income, either you can pay quarterly taxes or increase withholdings via Form W4.  Additionally, since you are filing jointly, you can increase your withholdings to pay for your wife's side gig income.

However, just for information purposes, side gig income is considered self-employment income. While the taxes on this income will be cover with the extra withholdings which you will be doing from your own earnings, she will still have to pay self-employment tax when she files the taxes next year since the side gig income is considered self-employment income. The self-employment tax rate is 15.3% (12.4% for Social Security & 2.9% for Medicare).

[labaholt]

Why are you guys so clear, concise and just great?!

Thank you so much for your advice. It confirms what we thought.

Much appreciated.