How should I file if one spouse is employed and the other is Self- Employed?

[drussell20]

Not sure to file "married filing seperately" or "married filing jointly"

[aambrose2]

We normally file "married filing jointly"

[MinhT]

If one spouse is an employee and the other spouse is self-employed, you always have the choice to file Married filing Jointly or Married filing Separately.

In most cases, it is more advantageous for married couples to file jointly. This is the option which leads globally to less tax for the couple.

If you decide to file separately, please be aware that there are special rules for married couples filing separately.

Here are the special rules:

If you choose married filing separately as your filing status, the following special rules apply. Because of these special rules, you usually pay more tax on a separate return than if you use another filing status you qualify for.

1. Your tax rate generally is higher than on a joint return.
2. Your exemption amount for figuring the alternative minimum tax is half that allowed on a joint return.
3. You can't take the credit for child and dependent care expenses in most cases, and the amount you can exclude from income under an employer's dependent care assistance program is limited to $2,500 (instead of $5,000 on a joint return). However, if you are legally separated or living apart from your spouse, you may be able to file a separate return and still take the credit. See What’s Your Filing Status? in Pub. 503, Child and Dependent Care Expenses, for more information.
4. You can't take the earned income credit.
5. You can't take the exclusion or credit for adoption expenses in most cases.
6. You can't take the education credits (the American opportunity credit and lifetime learning credit), the deduction for student loan interest, or the tuition and fees deduction.
7. You can't exclude any interest income from qualified U.S. savings bonds you used for higher education expenses.
8. If you lived with your spouse at any time during the tax year:
1. You can't claim the credit for the elderly or the disabled, and
2. You must include in income a greater percentage (up to 85%) of any social security or equivalent railroad retirement benefits you received.
9. The following credits and deductions are reduced at income levels half those for a joint return:
1. The child tax credit,
2. The retirement savings contributions credit,
3. The deduction for personal exemptions, and
4. Itemized deductions.
10. Your capital loss deduction limit is $1,500 (instead of $3,000 on a joint return).
11. If your spouse itemizes deductions, you can't claim the standard deduction. If you can claim the standard deduction, your basic standard deduction is half the amount allowed on a joint return.

[ColeenD3]

@aambrose2

There is no reason why you can't file jointly. A Schedule C is not a separate entity sio you don't need a separate program. You just need a program that handles both the personal side and the business side, such as Self-Employed or Home and Business.

[htchiu]

We are the same situation, one spouse is an employee and the other is self-employed and we do Married filling Jointly. But our question is: does self-employed spouse need to pay self-employed tax quarterly? or the spouses just file an annual return?

[VolvoGirl]

@htchiu   Yes you might need to pay quarterly ESTIMATED taxes.  Those are just prepayments towards your actual annual joint tax return.  Estimates are just like withholding your spouse has taken out of their paycheck.  Estimates are to cover the self employment tax on your personal Joint return since you don't have any withholding taken out.   You will get credit on your return for the estimates you send in.  So keep track of the dates and amounts.  You will have to enter them into your return next year.

You must make quarterly estimated tax payments for the current tax year if both of the following apply:

- 1. You expect to owe at least $1,000 in tax for the current tax year, after subtracting your withholding and credits.

- 2. You expect your withholding and credits to be less than the smaller of:

    90% of the tax to be shown on your current year’s tax return, or

  100% of the tax shown on your prior year’s tax return. (Your prior year tax return must cover all 12 months).

[Nbeeler]

We are also one employee and one self employed and we file jointly. My question is if my husband (employee) can just increase the withholding on his pay check in a way that it would be covering my taxes, so I wouldn't need to pay the estimated tax. 

Thanks

[ThomasM125]

@Nbeeler Yes, either spouse can pay in the tax, as long as it gets paid in on a timely basis. It doesn't matter if it is paid in though withholding or by estimated tax.