Calculating estimated taxes

[mike915]

My wife started working as a contractor this year and I am a W2 employee.  We usually file as married filing jointly.

When calculating her estimated taxes should I calculate them as if she is filing them married filing jointly or married filing single?

[DianeC958]

To calculate the Federal Tax amount due, you still use Married Filing Jointly.  The amount due to pay the Self-Employment tax does not change with the filing status you use, the amount is 15.3% on the profit of the business.

Estimated Taxes: How to Determine What to Pay and When

[Carl]

If you are married and file separate *for any reason* then you both "automatically" disqualify for tax deductions and credits you would otherwise get if you filed joint.

The fact that one of you is self-employed is irrelevant. You still file joint.You'll be using the self-employed version if using the online turbotax, or at least the Premier version if you installed the program from a CD/downloaded installation file. The program will figure the 2019 self-employment tax on the business income for you, automatically.

You also have the option to allow the program to figure your 2020 estimated tax payments if you want. But in my personal opinion (and we all know what opinions are like) it's a waste of time. If you send the IRS a minimum of 20% of the business gross earnings each quarter, then come 2020 tax filing time next year, you'll be fine.

If your state also taxes personal income, then you should also send your state quarterly payments that match the maximum tax rate your state imposes on earned income.

By following the guidance above, you're practically guaranteed a refund at tax filing time then. But in the rare chance you end up owing more (which is highly unlikely but not impossible) it would come to less than $1000 quite easily.

[mike915]

I've already done our taxes for last year.  I'm now using the 1040ES form to calculate her estimated tax payments for this year.  She's estimated to make under 20,000 for the year so if I calculate her estimate tax payment  as married filing jointly the standard deduction would be more then she is making for the year.  That doesn't seem right.

[mike915]

Carl,

What you are saying is that instead of using the form to calculate the payment just send a quarterly payment equivalent to 20% of what she is expected to earn and it should be enough to cover her?