Simple personal income tax question - withholding
by vita dulcedo spes (2013-07-23 22:10:06)
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My wife and I filed married jointly. Her current employment position does not allowing for withholding of federal income taxes. Can I just increase my withholding to cover her estimated tax bill instead of making quarterly payments to the IRS? Does the IRS care if all of the income taxes for both of us are withheld on my paycheck?


Thanks, everyone. *
by vitadulcedospes  (2013-07-24 06:12:13)     Delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Reply to Post


It makes no difference whose check the withholding comes
by wide right  (2013-07-23 23:10:35)     Delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Reply to Post

from. In addition, withholding is deemed taken out evenly throughout the year, regardless of when it's actually withheld, as opposed to estimated payments, which are credited to the quarter in which they're actually withheld. If you're underpaid YTD, you can make it up with payroll withholding and avoid penalty.

Without knowing your exact situation, I would say generally it would be more convenient to have your withholding adjusted to cover you both.

As an aside, your comment regarding her inability to have taxes withheld raises a question as to whether she's deemed self-employed. If so, you'll have to also factor in FICA and Medicare, a real treat.

Standard disclaimer that this advice is not a substitute for professional tax advice.

Edit to add that cdb9396 makes an excellent point regarding divorce. But in that unfortunate event, she'll be the one with a tax problem...not you.


CPA answer
by cdb9396  (2013-07-23 23:09:42)     cannot delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Reply to Post

The IRS does not care if you withhold 100% of the tax due from your paycheck. Go right ahead. You will not owe penalties either - as long as you cover the tax owed through withholding.

As a practice, CPA's do not typically recommend this action - given the divorce rate in the country. For example, if one spouse has no withholding and the couple divorces before the end of the year, the spouse that did not have any tax withheld would have a hell of a tax bill the following April.

I will say that I am curious to know why the employer does not allow withholding?


To answer your last question...
by vitadulcedospes  (2013-07-24 09:28:42)     cannot delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Reply to Post

I don't know other than what was provided to her in a simple Q&A document. She's technically in a grant funded training program. Her stipend is considered a fellowship and not compensation. The terms of the funding grant prohibit her from being classified as an employee by the organization that actually issues her paycheck.

Some people in her program use that fellowship to pay tuition for a concurrent graduate degree program. She has other funding sources to cover the tuition, so she's able to receive the fellowship funding as salary.

As a trainee, she is exempt from FICA, Social Security and Medicare taxes. That's pretty clear in the reading I've done.

Oddly, her state and local taxes are withheld from her paycheck.

I think we're okay on the divorce issue... unless she's secretly plotting against me, in which case I've got bigger problems to worry about.


You are correct on your FICA information....
by Sonofadomer  (2013-07-24 10:46:02)     Delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Reply to Post

if she is a resident/fellow, she should not have to pay FICA. I believe you are fine not paying quarterly taxes and instead adjusting your withholdings to account for taxes due on your wife's earnings


A related question,
by 01momanor  (2013-07-24 00:01:45)     cannot delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Reply to Post

Can the money withheld from one check be used to cover FICA and Medicare for the self-employed spouse, or just the regular federal income tax?


That becomes more difficult.
by cdb9396  (2013-07-24 08:16:30)     cannot delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Reply to Post

If spouse "A" files a joint return with spouse B and reports its income on Schedule C as a self-employed individual, then the withholding from spouse "B" will be allowed to cover all taxes of spouse A, including SS and medicare.

IF spouse A is actually an employee of its employer, then spouse B's withholding can NOT be used to cover spouse A's Social Security and medicare taxes.


Now you got me curious, what difference would it make ?
by KelleyCook  (2013-07-24 13:16:18)     cannot delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Reply to Post

I realize that a normal employer is required to pay "their half" of FICA and withhold the other half. So legally they must do so.

But that part aside, as far as I can tell the FICA all just flows down into the same bucket via either line 56 or line 57 on the jointly filed 1040.

And as long as the total amount withheld is more than you owe in total taxes and they were made in timely fashion (which they would have been based upon being withheld by the spouse weekly), I'm not seeing what the problem is.


The employer half is what I was talking about. *
by cdb9396  (2013-07-24 16:41:46)     Delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Reply to Post


It's a bit of a math and timing issue.
by doolinbanjos  (2013-07-23 22:21:38)     Delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Reply to Post

You could be subject to penalties because the second and third quarterly payments are due, respectively, before you will have made 1/2th and 3/4ths of your withholding payments.

[edit - not an accountant either - this is just my best guess]


I'm no accountant. But I don't think it matters.
by FourLeafDomer  (2013-07-23 22:13:40)     cannot delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Reply to Post

As a couple, you have a tax bill due at filing. The only thing that matters is what the two of you owe on a combined basis.

[again, I'm not an accountant]


I'm with you. *
by G.K.Chesterton  (2013-07-24 00:00:36)     Delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Reply to Post


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