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Sunflowerssssss1
Level 2

Husband works for a company i have small business

Hi,

My husband works for a company and I own a small business. How do we know how much tax to take out on his w-4 so we don't owe at the end of year? Do we use just his income or our combined income? I pay estimated quarterly taxes for my small business.  Thank you

6 Replies
Sunflowerssssss1
Level 2

Husband works for a company i have small business

Also, we have no dependants.

melj1
Employee Tax Expert

Husband works for a company i have small business

It is always difficult when you have one spouse with withholding and one that is self-employed. The most important thing is to avoid the penalty for underpayment of estimated tax. To avoid that you will need to meet the either of the following:

1.  You expect to owe less than $1,000 in tax after your withholding and refundable credits.

2.  You expect your withholding and refundable credits to be less than the smaller of (1) 90% of the tax to be shown your tax return, or (2) 100% of the tax shown on the previous year's tax return.

You are likely filing married filing joint, this will be based on you joint income. If you meet any of the exceptions, it only avoids the penalty. You may still owe additional income taxes for the year.

 

 

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Sunflowerssssss1
Level 2

Husband works for a company i have small business

Ok. This did not help me. How much should my husband be taking out of his pay check? I am paying quarterly taxes for my small business. The amount I am paying is the according to what I paid in last year. Thanks

Corrlich44
Employee Tax & Finance Expert

Husband works for a company i have small business

Hi,

 

Although I do not know what type of business you have to be paying estimated taxes on, if your business is a pass-through entity where you are a Single-Member Owner or Partner, you are paying estimated taxes on your share of that income only, which would not take into consideration your combined marital income, if you are filing as Married Filing Joint and may place you in a higher tax bracket. It would be best to have your husband file as Married, but withhold at the higher Single Rate, and possibly include additional withholding tax on Line 4c, once you start getting more of a feel of where your income limits are placing you.

 

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Sunflowerssssss1
Level 2

Husband works for a company i have small business

Thank you. We have been taking out extra withholding and we are hoping it is enough. I did see a calculator. So I will do that so I can feel a bit more comfortable about where we stand with our taxes.

 

Corrlich44
Employee Tax & Finance Expert

Husband works for a company i have small business

Sounds like a plan, because I know this is very hard to reasonable assess.

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