First year filing single (recent widow) & computing quarterly Self-Employment installments

[AleilahP]

My husband died in 2022 so this will be the first year I file as a single person. I am over 65 and am sole proprietor for my own business. I am concerned about the loss of the married filing jointly deduction and unsure how to compute my self-employment quarterly installments. My income is about 1/3 Social Security, 2/3 self-employment. I appreciate any advice on offer. 

[KarenL4]

Hi,

First, sorry for your loss. 

You did give us some information on your employment mix, but not the actual values, but let me give this my best shot!

I am guessing you don't qualify for the qualifying widow status.  Just in case I misunderstood, I am also including this article, which has some very helpful information for folks with a recently deceased spouse.

Your Social Security is potentially taxable, if your combined income as a single person (assuming that is your correct status now) is more than $25,000.  Between $25K and $34K, 50% of a single person's Social Security is taxable. If your combined income is greater than $34K, up to 85% of a single person's social security benefits may be taxable.  This information from Social Security may help.

 If you expect to owe more than $1,000 in federal taxes for the tax year, you may need to make estimated quarterly tax payments using Form 1040-ES, or else face a penalty for underpayment.  This article explains more and talks about the safe harbor (which I have recapped below).

To determine whether you need to make quarterly estimates, answer these questions:

1. Will you owe less than $1,000 in taxes for the tax year after subtracting your federal income tax withholding from the total amount of tax you expect to owe this year? If so, you're safe—you don't need to make estimated tax payments.
2. Do you expect your federal income tax withholding to amount to at least 90 percent of the total tax that you will owe for this tax year? If so, then you're in the clear, and you don't need to make estimated tax payments.
3. Do you expect that your income tax withholding will be at least 100 percent of the total tax on your previous year's return? Or, if your adjusted gross income (2022 Form 1040, line 11) on your tax return was over $150,000 ($75,000 if you're married and file separately), do you expect that your income tax withholding will be at least 110 percent of the total tax for the previous year? If so, then you're not required to make estimated tax payments.

If you answered "no" to all of these questions, you must make estimated tax payments using Form 1040-ES. To avoid a penalty, your total tax payments (estimated taxes plus withholding) during the year must satisfy one of the requirements we just covered.

You also may need to pay estimated taxes to your state, as well. State rules can vary, but you can usually find them by searching your state's name and "estimated taxes" in a search engine like google.

In case it's helpful,here's a great  article on self-employed deductions.

To do a deeper dive on your personal situation, you may wish to reach out to a live tax expert at Intuit (https://turbotax.intuit.com/personal-taxes/online/live/) or provide more specific details in a follow up message.

*Say "Thanks" by clicking the thumb icon in a post

**Mark the post that answers your question by clicking on "Mark as Best Answer"

Best,

Karen

4 hours ago

[KarenL4]

Hi,

First, sorry for your loss. 

You did give us some information on your employment mix, but not the actual values, but let me give this my best shot!

I am guessing you don't qualify for the qualifying widow status.  Just in case I misunderstood, I am also including this article, which has some very helpful information for folks with a recently deceased spouse.

Your Social Security is potentially taxable, if your combined income as a single person (assuming that is your correct status now) is more than $25,000.  Between $25K and $34K, 50% of a single person's Social Security is taxable. If your combined income is greater than $34K, up to 85% of a single person's social security benefits may be taxable.  This information from Social Security may help.

 If you expect to owe more than $1,000 in federal taxes for the tax year, you may need to make estimated quarterly tax payments using Form 1040-ES, or else face a penalty for underpayment.  This article explains more and talks about the safe harbor (which I have recapped below).

To determine whether you need to make quarterly estimates, answer these questions:

1. Will you owe less than $1,000 in taxes for the tax year after subtracting your federal income tax withholding from the total amount of tax you expect to owe this year? If so, you're safe—you don't need to make estimated tax payments.
2. Do you expect your federal income tax withholding to amount to at least 90 percent of the total tax that you will owe for this tax year? If so, then you're in the clear, and you don't need to make estimated tax payments.
3. Do you expect that your income tax withholding will be at least 100 percent of the total tax on your previous year's return? Or, if your adjusted gross income (2022 Form 1040, line 11) on your tax return was over $150,000 ($75,000 if you're married and file separately), do you expect that your income tax withholding will be at least 110 percent of the total tax for the previous year? If so, then you're not required to make estimated tax payments.

If you answered "no" to all of these questions, you must make estimated tax payments using Form 1040-ES. To avoid a penalty, your total tax payments (estimated taxes plus withholding) during the year must satisfy one of the requirements we just covered.

You also may need to pay estimated taxes to your state, as well. State rules can vary, but you can usually find them by searching your state's name and "estimated taxes" in a search engine like google.

In case it's helpful,here's a great  article on self-employed deductions.

To do a deeper dive on your personal situation, you may wish to reach out to a live tax expert at Intuit (https://turbotax.intuit.com/personal-taxes/online/live/) or provide more specific details in a follow up message.

*Say "Thanks" by clicking the thumb icon in a post

**Mark the post that answers your question by clicking on "Mark as Best Answer"

Best,

Karen