topic My wife makes less than 12,000 a year and has no withholdings on her pay cycles. Will this impact the amount of our tax return? I make ~100,000 a year. in Get your taxes done using TurboTax

My wife makes less than 12,000 a year and has no withholdings on her pay cycles. Will this impact the amount of our tax return? I make ~100,000 a year.

kralljoe — Tue, 13 Oct 2020 23:34:06 GMT

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?

In my example: Wife makes 10,000 and I make 100,000.  Wife has no withholdings on her paycheck, but I do.  So when it comes time to do tax returns, our total income is 110,000 and my wife's 10,000 of that income has not had any withholdings.

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?

Re: My wife makes less than 12,000 a year and has no withholdings on her pay cycles. Will this impact the amount of our tax return? I make ~100,000 a year.

Anonymous — Wed, 11 Nov 2020 02:01:10 GMT

it's more complicated than that. it depends on your withholding in relation to your total taxes for 2020.

if you use the standard deduction for 2020, your taxable income would be $82,600 and the federal taxes on that would be less than $10,000

this assumes that your wife's earnings are wages and not Self Employment income and you have no additional taxes or credits. without her $10K the joint tax would be about $8500. so yes your refund will be less because of the taxes on her income without withholding.

what's your philosophy about letting the government hold your money interest free over the course of a year or more?

Re: My wife makes less than 12,000 a year and has no withholdings on her pay cycles. Will this impact the amount of our tax return? I make ~100,000 a year.

Critter-3 — Wed, 11 Nov 2020 02:24:07 GMT

Between the both of your paychecks you need to have enough withheld to cover your tax liability. Right now her employer is withholding nothing is because if that was the ONLY income for the year the 2 of you have you would owe nothing.

Use the IRS tool to figure how both of your W-4 forms should be filled in ...

http://www.irs.gov/Individuals/IRS-Withholding-Calculator

Re: My wife makes less than 12,000 a year and has no withholdings on her pay cycles. Will this impact the amount of our tax return? I make ~100,000 a year.

Hal_Al — Wed, 11 Nov 2020 12:47:40 GMT

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%)