Filing jointly with spouse - do we pay quarterly taxes on total earnings or just her business's projected taxes?

This is super helpful, but I'm still confused about one thing. If my wife's business starts making more money later in the year than we initially projected, can we adjust the quarterly payments? Or are we locked into whatever we calculated at the beginning of the year?

You can absolutely adjust quarterly payments as the year progresses. The estimated tax system is designed to be flexible as your income changes. If your wife's business starts earning more, you can increase subsequent quarterly payments to account for the higher income. Each quarterly payment stands on its own, so you're not locked into any particular amount. Just recalculate based on the new projected annual income and adjust accordingly. The IRS Form 1040-ES includes worksheets to help with these calculations, or tax software can help you run the numbers.

Did it help with calculating the self-employment tax portion too? That's the part I'm most confused about for my wife's business. And can you update it throughout the year as income fluctuates?

I'm skeptical about these tax tools - our situation gets complicated with rental properties too. Does it handle Schedule E income and expenses? And did it accurately predict what you actually ended up owing at tax time?

Yes, it calculated both the income tax and self-employment tax portions separately, which was super helpful. The self-employment tax calculation was actually what confused me the most before using it. The tool breaks it down clearly so you can see exactly how much is going to each type of tax. It's designed to be updated throughout the year as income changes. We adjusted our projections twice when my husband landed bigger contracts, and it recalculated the remaining quarterly payments to keep us on track. When we filed our taxes, we were within $200 of the projected amount, which saved us from any underpayment penalties.

How does this actually work? Does it just keep calling for you or something? I've tried calling the IRS three times about my quarterly payment situation and gave up after being on hold for 45+ minutes each time.

This sounds like a complete scam. There's no way to "skip the line" with the IRS. They're understaffed and everyone has to wait. I'll believe it when I see it - sounds like you're just trying to get people to waste money on a useless service.

It doesn't keep calling for you - it uses a system that continuously monitors the IRS phone lines and connects you when there's an opening. They've built technology that essentially waits on hold for you, then alerts you when an agent is about to pick up. It's like having a dedicated person whose only job is to get through to the IRS. I was extremely skeptical too before trying it. The reason it works is they're not "skipping the line" - they're just automating the waiting process. I was getting ready to hire a CPA just to answer my quarterly payment question, which would have cost way more than using this service. When I actually got through to an IRS agent who answered my specific situation, it saved me from making a costly mistake on my quarterly payments.

Thanks for bringing this up - I was only thinking about income tax and completely forgot about the self-employment tax aspect. Does that percentage sound about right even if her business isn't making huge profits yet? Is there a calculator you'd recommend for figuring this out more precisely?

The 30-35% is a general guideline that works for most situations, but it can vary depending on your tax bracket and other factors. If her business profits are relatively small, you might be able to set aside slightly less, but I wouldn't go below 25% to be safe. For a more precise calculation, I found the IRS's Tax Withholding Estimator to be helpful, though it takes some time to work through. There's also Schedule SE worksheet that calculates the exact self-employment tax. Most tax software like TurboTax or H&R Block have quarterly tax calculators built in that account for both income and self-employment tax.

Yes! We do this. I'm the W-2 earner and my husband has the business. I adjusted my withholding by reducing my allowances on my W-4. We calculated approximately how much extra we needed to withhold annually based on his projected profit, then divided by my pay periods. Way easier than separate quarterly payments.

That's great to hear it works for someone else! I was worried there might be some rule against it. Did you have any issues with the IRS questioning why your withholding was so much higher than what would be expected for just your income?

No issues at all! The IRS doesn't care why you're withholding more - they just care that you're paying enough to cover your total tax liability. As long as your combined withholding and any quarterly payments meet the safe harbor rules (generally 90% of current year tax or 100% of prior year tax), you're good. The only thing to watch out for is if your spouse's business income fluctuates a lot during the year. With quarterly payments, you can adjust as needed, but with increased W-2 withholding, you're locked into that amount for the whole year. We had to get a refund one year when my husband's business didn't do as well as projected, but honestly I'd rather overwithhold than underpay and deal with penalties.

This safe harbor rule explanation is really helpful! I'm curious about the business expense deduction you mentioned - when you say she can deduct half of her self-employment tax, does that happen automatically when filing or is there a specific form she needs to fill out? And does this deduction reduce the amount she needs to pay quarterly, or is it just applied when we file our annual return?