Self-employed Spouse retired mid-year

Forum|Forum|2 years ago
June 10, 2024
3 replies
39 views

I am self-employed and my spouse had always had extra deductions taken out of his paycheck to cover my business. He is retiring mid-year, so I am going to be underpaid by year-end. Will penalties be waived, given he is retiring and the fact that we got a refund last year?

Since we will be paying the full amount for his current employer's insurance plan, can I deduct my portion of it?

taxlady28

Level 10

Penalties will not be waived because your spouse retired. Determine how much you are going to owe next year and start making quarterly payments to cover it. You cannot deduct your portion of the insurance from your business expenses.

JotikaT2

Alumni - Expert

Please see the information in this blog to help you determine how much you should pay in estimated tax payments for the remainder of the year once your spouse retires.

Self-employment income has regular income tax as well as self-employment taxes. There are quarterly payments that can be made to the IRS to pay your taxes as you earn your income. If you do this, the chance of incurring any underpayment penalties is greatly reduced. Typically, you would need to pay either 100% of your prior year total tax or 90% of your current year tax to avoid any of these penalties.

Please see this link from the IRS to assist you in preparing and paying your estimated tax payments.

@ketaml

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NCperson

Level 15

@taxlady28

since you are self employed, you can deduct your medical premiums (including your spouses'); it will appear as an adjustment to income on schedule 1 Line 17. This is true whether this is a private medical plan or Medicare and must be paid on an after tax basis. If you are taking a distribution from an HSA to cover any Medicare premiums, then you can't also adjust for these same premiums on Schedule 1.