Do I Need To File Quarterly Estimated Taxes for Wife's Business in 2019?

[bdevido]

My wife started her own consulting business in 2018. Because of startup expenses, the business showed a loss in 2018 and quarterly estimated tax payment forms didn't populate in TurboTax. Her company is set up as an LLC, so it's part of our Married Filing Jointly return (I have a regular job through an employer). Her overall loss was about $5K but she is going to have at least $20,000-$30,000 in income this year. 

Couple questions on this:

1) Can't we carry forward up to $3K of the losses from last year to reduce the overall taxable income for 2019?

2) Should I start paying quarterly estimated taxes now, even though she showed a loss last year? I already missed the April 15th deadline so will I have to pay a penalty?

Any advice is greatly appreciated. Thanks.

[LudwigVan_fan]

Hi:

As to your first question, here is a link to review and compute any possible NOL carryovers.  There are some new rules that took effect for years after 2017. 

https://www.irs.gov/publications/p536

As to your second question, yes, it will be a good idea to make estimated payments for your spouse's business.  Not only will there be income tax that will have no withholding, but there will also be self-employment tax that will add to your tax burden and there will be no withholding for it.

As to any penalties, missing the April 15th deadline for ES payments does not necessarily result in penalties.  When the 2019 is filed in 2020, the total amount owed after considering all withholding(s), credits, pre-payments, and estimated payments must meet a certain threshold before an estimated tax payment penalties are applicable.

https://www.irs.gov/businesses/small-businesses-self-employed/estimated-taxes

Penalty for Underpayment of Estimated Tax

If you didn’t pay enough tax throughout the year, either through withholding or by making estimated tax payments, you may have to pay a penalty for underpayment of estimated tax. Generally, most taxpayers will avoid this penalty if they owe less than $1,000 in tax after subtracting their withholdings and credits, or if they paid at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller. There are special rules for farmers and fishermen. Please refer to Publication 505, Tax Withholding and Estimated Tax, for additional information.