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My wife has several part-time jobs with variable demand and therefore variable income.

Considering we filled in 0 exemptions on all her new jobs' W-4s, I am trying to work out if the estimated taxes that paid were correct (refer to form 1040-ES). I came up with a spreadsheet like the one below:

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For the C and D columns, I looked through all her payslips and added the amounts based on the period. For the total amount owed (column E), I added my own income to her income and figured out our tax bracket (we are filing jointly), then multiplied the C column by the percentage of our tax bracket. F is then the difference between E and D and therefore the amount I paid on each due date (column B). We don't have kids or any other types of credit, so I'm assuming the standard deduction is all we have to take into consideration.

I decided not to pay the estimated tax in installments.

So this is how I paid the taxes for her 2016 income so far. Does this sound correct to you guys?

  • Did you multiply all your joint income by your marginal rate? – DJohnM Sep 18 '16 at 16:56
  • No, only hers. Her income isn't enough to take us to the next bracket and I did consider that some fractions of my income had lower taxation due to lower brackets – Hill Sep 18 '16 at 17:12
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I think you are doing this somewhat incorrect, but are on the right path. Just fill out the 1040 ES and include your income. I would (and do) start early in the year, with estimated earnings and deductions. As the year progresses, you can firm up the picture more and more.

This is why I like you doing this in a spreadsheet. You can update figures fairly easy and see where you stand as far as owing or having a refund. W-2 exemptions have really no bearing on if you are withholding the proper tax in many situations.

I would have a these columns that might require summations of a group of other columns:

  • Your income to date
  • Your tax withheld to date
  • Your estimated income for remainder of year
  • Your estimated withholding for remainder of year
  • Her income to date
  • Her tax withheld to date
  • Her estimated income for remainder of year
  • Her estimated withholding for remainder of year

Total all that up and you end up with your estimated AGI.

Once you have that, you apply your expected deductions.

Then you can use the tax tables to figure out how much you will owe in taxes. Comparing this to the estimated amount paid and you can adjust withholding accordingly.

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