I started contracting for a company in September of 2020. My husband is a regular employee of a company that gets paid regularly throughout the year.
I paid estimated taxes for the 4th quarter of 2020 on my self-employed income, but using the tax rate for combined income, since we file jointly.
I now have an underpayment penalty. If I annualize my income, I noticed TurboTax asks not only how much cumulative income I made as a contractor each period, but also the cumulative adjusted gross income for each period. This obviously includes my husbands income. Can I just divide his income into the 4 periods, since he earned evenly over the year?
Also does the fact that the AGI is included in the annualization mean I should be paying estimated taxes on our AGI and not just my contractor income? My husband has normal withholdings each paycheck, so I assumed I would only pay estimated taxes on my income. For this year, I am still contracting, but my income varies throughout the year, so I will need to annualize for this year as well.
