Q. This probably means there's 10,000 of our income that I'll end up owing taxes on? And this would make our tax return less, right?
A. Yes. Simple answer you will owe $2640 of income tax on that $12,000 of income, because you are in the 22% marginal tax bracket. But, wait, there's more.
Q. I understand making less than 12,000 a year (the standard deduction) means you don't owe any taxes. But what about if you are filing married jointly with a spouse who makes much more?
A. Mathematically, you have already used "her" $12,200 deduction against your $100K income. Actually, there is no His & Her standard deduction, there is just a $24,400 Joint standard deduction.
You say there has been no withholding from her pay. That sounds like her "employer" is treating her as a "contract employee". For tax purposes, that makes her a self employed person and she will have to pay her own FICA (social security and Medicare) tax in the form of "Self employment tax" (SET). This is an additional 14.13%, in addition to the 22% income tax (the stated SET rate is 15.3%, but in a complex calculation works out to 14.13%)
