How should my wife and I file our taxes if I receive a W-2 and she does not?

How should my wife and I file our taxes if I receive a W-2 and she does not?

by Susan E. S. Howe, CPA | Feb 02, 2018

My wife is a real estate agent and does not have taxes taken out of her commissions. My company takes out my taxes, and I get a W-2. My question is, what is the best way for us to file taxes?

How your taxes are paid and how you file are two different things. In general, married filing jointly will be the best status for preparing your 1040 because the rates are generally lower than any other allowable filing status. There are exceptions, so you may want to consult a CPA for help if your situation has complexities. Your return will be prepared reporting all your joint income and expenses, including your W-2 and your wife's commission income, which would likely be reported on Schedule C so that she can deduct any business expenses. Unless your withholding is very high or you make estimated payments to cover taxes on your wife's income, it's likely that you may owe tax with your return. To avoid this in the future (and any interest and penalties on underpayment), you can make quarterly estimated payments to cover the estimated tax on your wife's commission income.
Since preparing a Schedule C can be a little complex, it may be a good idea to consult a CPA for help. A CPA can help you minimize any underpayment penalties and can help you make sure you get all the allowable deductions applicable to your wife's business. A CPA can also help you determine the correct amount to pay in estimated taxes going forward.

For more resources, check out PICPA’s Money & Life Tips, Ask a CPA, or CPA Locator.

Answered by: Susan E. S. Howe, CPA, is principal of Howe Advisory in Strafford, Pa.

The responses are based on the limited information provided by the questioner and apply the laws and regulations at the time of posting. Other options could arise as rules and regulations may change over time, including but not limited to the passage of the Tax Cuts and Jobs Act of 2017. They are intended to provide general information, not specific accounting or tax advice; they are not intended or written to be used and cannot be used for the purpose of avoiding or evading taxes or penalties under the IRS code or regulations. Views expressed do not imply an opinion of the PICPA, its officers, directors, employees, or members.
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