Assuming that you are having enough withholding taken from your pay then the estimated taxes are simply covering the tax liability, (income and Self-employment), for your wife who has no withholding.
The US tax system is a pay as you go system. You're "paying as you go" via withholding. Your wife needs to "pay as she goes" via estimated taxes. Actually, that's not exactly correct. You are reporting your combined income and you get credit against your combined income tax liability from both taxes withheld as well as estimated taxes paid. Get your withholding high enough and there's no need for estimated taxes. Lower your withholding as far as you can go and make if up with estimated taxes.
It's perfectly OK to owe a lot of money when you send in your income tax return. What you really want to do is to avoid being "underpaid" (a piece of tax jargon that has a specific legal meaning) and incurring large penalties.
Most taxpayers will avoid being underpaid if they:
1)owe less than $1,000 in tax after subtracting their taxes WITHHELD and available tax credits,
OR
2)if they paid at least the lesser of
a)90% of the tax for the current year, or
b)100% of the tax shown on the return for the prior year. (If last year's return shows AGI over $150K (for married filing jointly) then change that "100%" figure to "110%.)
For most people line 63 of their Form 1040 indicates the "tax shown on the tax return."
Tom Young
