It depends. As you know, the tax code is a pay-as-you go system, which means that, if you are planning on filing a joint return next year and expect the numbers you have in your comments, what can be done is get at least a rough estimate on how much tax you might owe. Then we can figure out how you get there.
I am assuming Married Filing Joint, the (new) standard deduction, and no credits or special deductions in this calculation. If your final wages (including commissions and bonus) come to 140,000, and her net self-employment (assuming no taxes are withheld) comes to 35,000, your gross income is roughly 175,000. Her self-employment tax will be just under 5,000. (There is a twist: self-employment is going to have 20% declared as nontaxable earnings this year. I haven't seen if that affects self-employment tax, and for this purpose I have eliminated it from the equation. Suffice to say that in the end you should get some more money back than my equations). Assuming a deduction for 1/2 of self-employment tax of 2,500 and the standard deduction of 24,000, your taxable income would be 148,000. The tax table amount comes to 24549, and with approximately 5,000 of self-employment tax your tax amount on that number around 29,500 (rough figure). To cover this amount, you could withhold at the single with zero allowances rate, and likely achieve your goal. Here are the calculations, assuming the same figures:
Assuming bi-weekly pay, your 110,000 salary will have approximately 760.00 withheld for 26 pay periods in the year. The total amount withheld will be right around 19,800. (If you have no bonus at all, your overall tax with 35,000 of self-employment is around 23,000). Then I assume 4 bonus payments of 7,500 each (using the same set of facts). These bonus payments get taxed heavily: around 2637.77 withheld each bonus payment. (These special payments are taxed assuming you are getting paid the same amount daily. Of course, this is not the case, but the extra tax pulled helps your cause in the end). This leads to over 10,500 of additional tax withheld, which, when added to your base tax withheld, comes to a total of 30,300, or a refund of about 800. Of course, if you have larger deductions, as well as how the self-employment deduction is calculated (which is an X-factor), you will have a smaller tax liability, and your refund will increase accordingly.
These are estimates, as some of this situation is a bit fluid, but the numbers are accurate based on current projections. And "there's more than one way to skin a cat" as the expression goes. Instead of withholding from just your check, you could choose a different withholding amount from your check, and then make estimated payments on the freelancing work. If you decide that route, I'd select Married and zero allowances on your income, and then on the quarterly estimates to cover your wife's income, approximately 37% of her net freelancing income dedicated to Federal and Self-Employment tax. (You project to be in the 22% bracket, and self-employment tax is 15.3%). Don't forget to account for state and local taxes if you live in an area where such taxes are imposed.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
