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Old 03-02-2016, 07:39 PM
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Estimated Quarterly Tax Filing Married Joint

Hello.

I am self employed and my wife is a W2 employee. This is my 2nd year of being self employed and I was told I will need to file estimated quarterly tax payments to the IRS this year.

My question is would i need to pay quarterly estimated tax payments when my wifes' withholdings from her income always get us a refund at the end of the year?

When I did our taxes for 2015 I owed around 3k but when I added her income in and her taxes withheld for the year we ended up getting a decent refund.

Should I not worry about the quarterly tax since I know we will get a refund or should I pay quarterly taxes to be extra cautious?

I would rather the IRS not have my Self Employment money throughout the year even though I would get it back when I file at the end of the year.

Any suggestion & help much appreciated!



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Old 03-04-2016, 04:57 PM
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I am self employed and my wife is a W2 employee. This is my 2nd year of being self employed and I was told I will need to file estimated quarterly tax payments to the IRS this year. ===>In general yes but it depends; as you are filing as a sole proprietor, and/or a self-employed individual, you generally have to make estimated tax payments if you expect to owe tax of $1K or more after subtractions of credits/withheld taxes or etcwhen you file your return.however, You do not have to pay estimated tax for the current year if you had no tax liability for the prior year;You were a U.S. citizen or resident for the whole year;Your prior tax year covered a 12 month period


My question is would i need to pay quarterly estimated tax payments when my wifes' withholdings from her income always get us a refund at the end of the year?===>it also depends;as said, aslongas the refund exceeds your joint tax alibility on 1040 then, you actually do not need topay estimated taxes;you can elect to have an overpayment refunded or applied to your subsequent year?s estimated tax payment. This election, once made, is generally irrevocable -


When I did our taxes for 2015 I owed around 3k but when I added her income in and her taxes withheld for the year we ended up getting a decent refund. =>>then you maY do as mentioned above;

Should I not worry about the quarterly tax since I know we will get a refund or should I pay quarterly taxes to be extra cautious? ====>As said above,
Generally, you do not have to pay estimated taxes if you will receive a refund at the end of the year. You usually pay estimated taxes to make up for a shortfall in taxes, i.e., you owe money when filing due to your self-employment income. If there is no shortfall, no, you do not need to pay quarterly estimated taxes.



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Old 03-05-2016, 11:43 AM
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Thank you very much for your response.

Just to make sure I completely understand. Since I file joint returns with my wife and we received a refund last year I do not have to pay quarterly estimated tax this current year?

If by chance for example when we file returns for 2016 and if we end up owing tax due to my self employment income for 2016 then I will begin to make estimated quarterly estimated tax payments for 2017?

I would not be charged penalties for not filing estimated quarterly tax payments for 2016 returns (since we received refund 2015) only 2017 if I failed to make the estimated tax payments for the year of 2017?

I can assume no penalties would be assessed even if we ended up owing taxes for this year since it would be the first year that we incurred no refund and we received a refund the previous year. The penalties only incur when and if we file and end up owing taxes then the current year I would need to start paying the estimated tax quarterly payments.

Thanks again for your help! Even though your answers seemed clear I just want to make sure I fully understand.



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Old 03-05-2016, 02:33 PM
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Quote:
Originally Posted by akamateo11 View Post
Thank you very much for your response.

Just to make sure I completely understand. Since I file joint returns with my wife and we received a refund last year I do not have to pay quarterly estimated tax this current year?

If by chance for example when we file returns for 2016 and if we end up owing tax due to my self employment income for 2016 then I will begin to make estimated quarterly estimated tax payments for 2017?

I would not be charged penalties for not filing estimated quarterly tax payments for 2016 returns (since we received refund 2015) only 2017 if I failed to make the estimated tax payments for the year of 2017?

I can assume no penalties would be assessed even if we ended up owing taxes for this year since it would be the first year that we incurred no refund and we received a refund the previous year. The penalties only incur when and if we file and end up owing taxes then the current year I would need to start paying the estimated tax quarterly payments.

Thanks again for your help! Even though your answers seemed clear I just want to make sure I fully understand.

Just to make sure I completely understand. Since I file joint returns with my wife and we received a refund last year I do not have to pay quarterly estimated tax this current year? ======>>>>>>>>>>>>>>As said, aslongas you expect to owe less than $1k in taxes for the tax year of 2015after subtracting your federal income tax withholding from the total amount of tax you expect to owe this year,then, you don't need to make estimated tax payments;as you said, you do file a married filing joint return and you do end up receiving a refund with everything reported, you do not have to pay quarterly estimated taxes. It is OK for your spouse's withholding to pay the taxes on your self-employment.

If by chance for example when we file returns for 2016 and if we end up owing tax due to my self employment income for 2016 then I will begin to make estimated quarterly estimated tax payments for 2017? ==>>>>>>>>>>>>>>>Correct; as mentioned above. aslongas you expect to owe at least $1k in taxes for the tax year of 2016 after subtracting your federal income tax withholding from the total amount of tax you expect to owe this year, then yes you need to pay estimated taxes;however, in reality some self employers do not pay estimated taxes and pay a certain amt of penalties and interest when their taxable income is not that high.

I would not be charged penalties for not filing estimated quarterly tax payments for 2016 returns (since we received refund 2015) only 2017 if I failed to make the estimated tax payments for the year of 2017? =====> >>>>>>>>>>>>>>>as you have remitted more in tax than the amount owed the previous year, there are no penalties.
If however, you anticipate that you will owe funds, then you should go ahead and remit some amount to the IRS quarterly

I can assume no penalties would be assessed even if we ended up owing taxes for this year since it would be the first year that we incurred no refund and we received a refund the previous year.=============>>>>>>>>>>>>>>>>it depends; Aslongas your last year?s refund can cover all of your tax liability for this year; if not, you need topay estimated taxes to close the gap between this year?s tax liability and the last year?s refund. it is still possible to get a tax refund one year and pay a penalty for underpayment the next.
for example, assume that for 2015, you paid $10.5K in taxes during the year, and therefore, received a tax refund of $500. If your 2016 return is exactly the same as your 2015 return, you will again receive a $500 refund. However, if your tax liability rises to $15k and you only pay the same $10.5k in taxes during the year, not only will you owe $4.5k in taxes but you will also owe an underpayment penalty as you did not pay one of the following:
1. 90% of the 2016 tax liability of $15k or payments of $13,500.
2. 100% of the 2015 tax liability of $10k or payments of $10k
The penalties only incur when and if we file and end up owing taxes then the current year I would need to start paying the estimated tax quarterly payments.====> correct.Should your income get higher, you may want to consider filing quarterly estimates but at this point you appear to be safe.



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Old 03-05-2016, 03:36 PM
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Thank you! Great information!



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