Taxes during the year for 1099-NEC income, if there is W2 income also in 'married filing jointly'

[med25]

Hello,

My income is only through W2, and my spouse's income is only through one 1099-NEC (part time job). We file taxes as “married filing jointly”.

Taxes are regularly deducted from my paychecks during the year.

Is it mandatory that my spouse pays any federal, social security, medicare or state taxes during the year as she is receiving her paycheck? Or she doesn’t need to, and we can just level it up (pay what we own/get a refund) when we file taxes for the full year? As mentioned - we always file taxes as “married filing jointly”, and if important, my spouse’s 1099-NEC income is single digit percentage of my W2 income.

[VolvoGirl]

Either way.  Or you can increase  your W2 withholding to cover her self employment tax.  You should try to pay estimates during the year.  If you end up owing too much when you file your tax return there will be a penalty.  

Self Employment tax (Scheduled SE) is automatically generated if a person has $400 or more of net profit from self-employment. You pay 15.3% SE tax on 92.35% of your Net Profit (If it is greater than $400). The 15.3% self employed SE Tax is to pay both the employer part and employee part of Social Security and Medicare (FICA). So you get social security credit for it when you retire. It is in addition to any regular income tax you owe on it.  Plus state tax.  

[med25]

Thank you. What is general rule of thumb to define "owing too much" from the experience? 

E.g. is it maybe owning ~50% of what you supposed to pay for full year when combined in 'married filing jointly'; or more than 10%...

[DawnC]

You may avoid the Underpayment of Estimated Tax by Individuals Penalty if:

• Your filed tax return shows you owe less than $1,000 or
• You paid at least 90% of the tax shown on the return for the taxable year or 100% of the tax shown on the return for the prior year, whichever amount is less. If your adjusted gross income (AGI) for 2023 was more than $150,000 ($75,000 if your filing status for 2024 is married filing separately), substitute 110% for 100%.

The IRS urges taxpayers to check into their options to avoid these penalties.

• Check your withholding often and adjust it when your situation changes. To do this fill out a new Form W-4 and give it to your employer.  
• Estimated tax is the method used to pay tax on income that is not subject to withholding (for example, earnings from self-employment, interest, dividends, rents, alimony, etc.). 

Do I need to make estimated tax payments to the IRS?

Taxes are pay-as-you-go. This means that you need to pay most of your tax during the year, as you receive income, rather than paying at the end of the year. The Underpayment of Estimated Tax by Individuals Penalty applies to individuals, estates and trust that don't pay enough estimated tax on their income, or you pay it late.   See IRS penalty page