Question

W-2 Income and Self Employed Income

Forum|Forum|2 years ago
August 30, 2023
2 replies
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Hello,

I receive W-2 income from my employer and my husband is self-employed receiving a 1099-NEC from his independent contractor job. On my W-2 payroll, the tax withholding filing status is "Married Filing Jointly," and the state withholding has 1 allowance. In this scenario, I have 2 questions:

1. Is my husband required to make estimated quarterly tax payments? Or can we just account for that when we file our taxes? FYI - he currently is not making estimated quarterly payments. Last year was his first year as a self-employed individual and our first year filing jointly, so we are fairly new to this.

2. If he's required to make quarterly payments, are they based on his self-employment income only since I'm already withholding from my W-2 paycheck? And how are the payments calculated?

Thank you!!!

Ask the Experts - Self-Employed - Aug 2023

R

RPZ1

Hello,

I will be including a link for a more detailed explanation that you can have for future reference. The answer to the first question is yes he should make quarterly estimated tax payments. If you wait until the end of the year to pay the self-employment taxes the IRS may charge you a penalty. The dates that the payments are due to the IRS are 4/15, 6/15, 9/16 and 1/15 of the following year. As an example the 4th quarter estimated tax payment for 2023 will be 1/15/2024.

Yes you are correct that your husband is the only one required to make estimated payments on his income your taxes have already been paid.

https://turbotax.intuit.com/tax-tips/self-employment-taxes/a-guide-to-paying-quarterly-taxes/L6p8C53xQ

https://turbotax.intuit.com/tax-tips/small-business-taxes/estimated-taxes-how-to-determine-what-to-pay-and-when/L3OPIbJNw

https://turbotax.intuit.com/tax-tips/self-employment-taxes/tips-for-paying-estimated-taxes/L1nDU0sUs

The best way to pay the estimated taxes is by creating an account at IRS.gov where you can pay digitally. When you open their site type "estimated tax payments" into the search bar.

Hopefully these links will help you moving forward

A

Am_pick0406Author

Thank you!

Do we need to add 4/15 and 6/15 quarterly amounts to the 9/16 quarterly payment? Thus making 3 quarters worth of payments next month?

J

JandKit

Hi Am_pick0406,

I would make the appropriate payment as soon as possibe. The dates given are the lastest that any payment can be made in any quarter.

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J

JandKit

Hi Am_pick0406,

just to chime in with the reply already given, the way to calculate the estimated tax payment is to accuately calculate the income received. If that income is on the 1099 NEC, Box 1 will indicate the amount paid for the year...

Next,

calculate the amount of deductions or expenses that your husband incurred.

Next, Subtract the difference of these two,

Income minus deductions/expenses

the remainder is your profit or loss.

If negative, there is no tax due.

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A

Am_pick0406Author

So for 2023 estimated quarterly tax payments, we need to take his income amount from 2022 (shown in Box 1 on 1099-NEC), divide by 4, then pay that amount quarterly?

For example: If his Box 1 income is $10,000, and there aren't any deductions or expenses (I understand this likely won't be the case, but just for example), we multiply the positive profit by 0.[removed] = $353.74, then make quarterly payments of that amount?