Me=W2, wife=self-employed. should the estimated tax payments made be based on her income alone or our combined adjusted gross income?

[jdsmith0708]

I have all my deductions done through my employer and my wife makes quarterly payments based on her income, but our concern is whether or not we've been making enough in terms of a payment. We're just not sure if the payments are supposed to be based on our gross adjusted income or just hers. For what it's worth, we're filing MFJ (married filing jointly).

[KatrinaB]

Generally, you base the estimated tax on the self-employment portion of income. Please see the page at the IRS website below:

https://www.irs.gov/pub/irs-pdf/f1040es.pdf

However, you should consider your total income to get a more accurate estimate: 

When attempting to estimate your income tax for the year ahead, you are predicting the future. If you underestimate, you may be penalized for the number of days it remains unpaid. The simple way to ensure that you pay what you owe is to pay at least 100 percent of the tax you paid the previous year, unless you have some indication you are going to earn significantly less. 

If you think you are going to make less, calculate about how much and try to pay 90 percent. If you pay 100 percent, and still owe a little more at the end of the year, that’s OK. 

There are "safe harbor payments" — a payment that ensures you will not be penalized. For example: 

1. If you are married, filing jointly and your adjusted gross income is below $150,000, you may make a payment equal to 100% of what you paid in income taxes the previous year or 90% of the tax you estimate for the current year. 

2. Taxpayers whose adjusted gross income is $150,000 or more must make a payment equal to 110% of the previous year’s taxes or 90% of the tax for the current year. 

[TomYoung]

Assuming that you are having enough withholding taken from your pay then the estimated taxes are simply covering the tax liability, (income and Self-employment), for your wife who has no withholding.

The US tax system is a pay as you go system.  You're "paying as you go" via withholding.  Your wife needs to "pay as she goes" via estimated taxes.  Actually, that's not exactly correct.  You are reporting your combined income and you get credit against your combined income tax liability from both taxes withheld as well as estimated taxes paid.  Get your withholding high enough and there's no need for estimated taxes.  Lower your withholding as far as you can go and make if up with estimated taxes.

It's perfectly OK to owe a lot of money when you send in your income tax return.  What you really want to do is to avoid being "underpaid" (a piece of tax jargon that has a specific legal meaning) and incurring large penalties.

Most taxpayers will avoid being underpaid if they:

1)owe less than $1,000 in tax after subtracting their taxes WITHHELD and available tax credits,

OR

2)if they paid at least the lesser of
     a)90% of the tax for the current year, or
     b)100% of the tax shown on the return for the prior year.  (If last year's return shows AGI over $150K (for married filing jointly) then change that "100%" figure to "110%.)

For most people line 63 of their Form 1040 indicates the "tax shown on the tax return."

Tom Young

[Ashpartin93]

What if self employed only made 1300 pay and 56 in tips and company he's a contractor with won't give him a 1099 because their guidelines are 20k paid and 600 in tips for the year?

[DianeC958]

You must claim the income on your tax return.  You do not need to have a tax form.

There are many circumstances where you would not receive a 1099 tax form even though you have income.  You can enter the income as Other self-employed income in the Self-Employment section of Turbo Tax.

Link for more information about reporting Self-Employment Income and Expenses

@Ashpartin 93