Self employed spouse

[AD H]

My wife accepted a freelance writer gig that paid her $5,000 this summer. We file joint married, how do we know whether she (or we) need to file quarterly estimates payments to account for that $5,000 of income? Also, she may receive another ~$5,000 payment in October, would that change anything?

Finally, if she does have to make estimated quarterly payments, how does one even do that? Federal and state? And would that involve physical mailing or are there digital forms (or even better, TurboTax tools)?

thanks!

[LoraineG]

Hi @AD H!

The first thing you need to consider (or her) is that you pay self-employment taxes on the net income, not the gross.  For example, if she got the $5,000, but she had to incur in expenses (ordinary and necessary) to be able to provide that service, let's say $2,000, then she pays taxes only on $3,000.  For that, she has to keep her bookkeeping up-to-date to monitor her business net income.  Things that she can deduct as expenses can include subscriptions and/or books that she needs to help her research a certain topic she wants to write about.

I always recommend to monitor your finances minimum twice a year, but preferably, quarterly.  That way you can make adjustments throughout the year.  

There are some calculators (from the IRS and TurboTax) that you can use to determine your tax liability.  Remember to include all your income if you file married filing jointly.

• 2022-2023 tax calculators and money-saving tools 
• Tax Withholding Estimator 

Can you tell me which state you live in?

[LoraineG]

Regarding where to pay the estimated tax payments, you can send checks by mail, but if you are technologic enough, definitely recommend to pay online.  You can do so through your IRS online account or if you don't have an IRS online account, you can use the IRS online payments system.

Let me know which one is your state and I can get you the information for that state as well.  But most states will have an online payment system as well.

[AD H]

We live in PA. Where in our IRS Online account do we fill out and submit a quarterly payment? This isn’t something that TurboTax does?

[Ruth C-L]

For PA estimated tax payments, you can make a payment here: https://www.revenue.pa.gov/OnlineServices/MakeAPayment/Pages/default.aspx

Ruth, CPA, Esq.

[AD H]

So just to be clear, she has to make estimated payments for this income? Even though we file jointly at end of year?

And do I have to do anything right now? My wages are withheld each pay period (I’m a W-2 employee).

[LoraineG]

That will entirely depend on your combined income.  However, if she is not paying estimated tax payments, she will be "taking" from your withholding.  If you are not getting enough taxes withheld for both of you, then, definitely she needs to pay estimated tax payments to compensate, or you increase your withholding through your W-2 (if you are an employee).

[LoraineG]

TurboTax helps you calculating your estimated tax payments when you file your taxes, and also you can use the calculators to estimate throughout the year, but the actual payments need to be done through the IRS or the state, electronically or by check.