Estimated Taxes + W2 Spouse Income

[Chris Phillips]

I'm a little confused on how estimated taxes work for self employment. I was just curious if anyone else has the same scenario as me and if they pay estimated taxes through out the year or not.

Currently my wife works part time W2, they do not with hold taxes and she does real estate in her free time which is classified as self employment. I work a full time W2 and pay far more taxes than I need to which covers all of her taxes not with held and we still get a modest return.

I have read in a few places that self employment requires estimated taxes and in other places that its "optional" if you are paying in enough taxes from a W2 income. Is anyone out there paying estimated taxes even though their taxes are covered by their spouses W2 (or their own)?

Thanks!

[Eric Antonson]

Hey Chris - 

Here's the short answer, no.  You are not required to make estimated tax payments.

The long answer:

You must pay estimated tax for 2019 if both of the following apply. 

1. You expect to owe at least $1,000 in tax for 2019, after subtracting your withholding and refundable credits. 

2. You expect your withholding and refundable credits to be less than the smaller of:

a. 90% of the tax to be shown on your 2019 tax return, or

b. 100% of the tax shown on your 2018 tax return. Your 2018 tax return must cover all 12 months.

You stated that you withhold enough in  your W-2 to cover all of yours, and hers. You're good to go NOT making estimated payments.

Hopefully that helps.