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How to do taxes for wife's new self employment job

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  • How to do taxes for wife's new self employment job

    My wife just started some freelance work and will begin receiving a paycheck. I am a standard w2 employee so not familiar with self employed taxes. I think we just calculate her quarterly estimated taxes and pay as we go for her? When it comes time to file the taxes would it be better to file jointly or separate? We do have 2 children and our deductables surpass the standard deduction. Thanks.

  • #2
    The married filing jointly vs. separately goes far beyond what you listed here but it is almost always a better idea to file MFJ. How much will her income be with regards to yours? If it is a fraction, it would be easiest just to up your withholding to meet the IRS safe harbors. Regardless of which way you decide, it's important to update your tax projections throughout the year so you don't have any surprises.

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    • #3
      Originally posted by CordMcNally View Post
      The married filing jointly vs. separately goes far beyond what you listed here but it is almost always a better idea to file MFJ. How much will her income be with regards to yours? If it is a fraction, it would be easiest just to up your withholding to meet the IRS safe harbors. Regardless of which way you decide, it's important to update your tax projections throughout the year so you don't have any surprises.
      That's what I would do. Less hassle

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      • #4
        Your CPA or tax s/w will be able to calculate the difference in MFS v MFJ. When couples file MFS, it is typically for 1 of 2 reasons:
        1. The spouse with the lower income has student loans and is trying to minimize payments under an income-driven repayment plan or
        2. One of the spouses has tax “issues” and the other spouse d/n/w to potentially bear the responsibility in the event that the spouse with issues d//n pay.
        CordMcNally is correct that whether you make est’s or not depends upon your wife’s expected 1099 income. If high ($100k+), you need to either make estimates or plan to pay the bal-due next April if withholding will put you in safe harbor. If lower, you s/b able to increase with holdings, depending, of course, on your own earnings. You really need to consider intra-year tax projections/planning.
        Our passion is protecting clients and others from predatory advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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        • #5
          With spouse having 1099 income, this opens up additional solo 401k contribution options for pretax retirement savings of $58-$64k.
          Might want to look into this.

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