Why are Estimated Taxes high?

[questvr3]

My spouse is Japanese national with US green card that works for a Japanese Consulate in the US. Estimated taxes seem unusually high for their salary. It's slightly less than 50K annual but estimated payments are around $2000 per quarter. I make more than that but get a W2. All of my taxes combined are less than my spouse's. What am I doing wrong?

[KarenJ2]

I am not sure as I cannot see your Is she filing as self-employed?   Just want to make sure it is not due to self-employment tax.  Do you have additional income that is being factored in this year?  

If you are a green card holder employed by a foreign government or international organization, you are not subject to self-employment taxes and may not voluntarily participate in the U.S. social security system. 

If you expect to have tax due at the end of the year, you must file estimated tax payments because your compensation is not subject to withholding. The estimated payments ensure that you have paid your proper amount of tax throughout the year.

[questvr3]

Thanks for replying. How to I make sure no self-employment tax is being factored in? Her income is reported every year as self employed and estimated tax payments are always made. I just don't understand why they always seem so high. Slightly more income was made last year over 2018 but not by much. 

[JamesG1]

Have you tried to review the 1040 and Schedules 1 and 2?

Self employment income can be found on IRS form 1040 Schedule 1 Part 1 line 3.  The total of Schedule I can be found on IRS form 1040 line 7a.

Self employment tax is on IRS form 1040 Schedule 2 Part II line 4 and on IRS form 1040 line 15.

You can review the 1040 in TurboTax Online by following these directions.

• Down the left side of the screen, click on Tax Tools.
• Click on Tools.
• Under Other helpful links, click on View Tax Summary.
• Down the left side of the screen, click on Preview My 1040 to see the actual tax return that you prepared.
• Down the left side of the screen, click Back to return.

You can print or view your full tax returns prior to filing after you have paid for the software.

[questvr3]

Thanks for the reply. I see the self employment tax amount.  But in Turbotax how do I exclude my spouse's income from this tax? 

[JamesG1]

Perhaps the statement below applies to your situation.  This IRS publication page 43 under Self-Employment Tax states:

“However, a resident alien employed by an international organization, a foreign government, or a wholly-owned instrumentality of a foreign government is not subject to the self-employment tax on income earned in the United States.”

What form do you receive to report this income?

[questvr3]

The consulate isn't required to give any specific tax forms. Employees there are independent contractors and get an end of year statement with their earnings, health insurance paid, etc. I've gone through the self employment income section in TurboTax several times but don't see any options to note this income is from a foreign government. How do I that?

[KarenJ2 · Accepted solution]

You need  to report the income as wages and not self-employment income.  Here is a IRS video on this issue. US Taxation of Employees of Foreign Governments & International Organizations

There are a number of references to green card holders in this video.

Employees of a Foreign Government or International Organization How to report Compensation

I think you should enter her wages as foreign income.  It is a way to get her wages reported as wages on the return.    

To enter your foreign wages in TurboTax, you need to:  

1. Enter foreign earned income in the search bar at the top of the screen and click the Jump to link  

2. On the first screen it will ask you what form your foreign income was reported on, you need to check statement from my foreign employer (converted to USD)  

3. On the next screen enter your Foreign wages  

4. Continue through the screens answering the questions  

5. Then you will get the screen,Would you like to Try and Exclude Your Foreign Earned Income,   

6. Enter no  

7. The program will tell you that form 2555 will be deleted, say  OK 

Now your foreign wages have been entered into the software.    

Let us know if you have further questions.