W4 Self Employment Income & Estimated Taxes

[Evading Deer]

Hello,

In Tax Year 2022, I had only self-employment income, my wife had income from an employer, we filed married jointly. And I made estimated tax payments throughout 2022. This year, I still have some self employment income and my wife still works for an employer, but I will be starting a new job next month with an employer (and continue to have some self-employment income).

My questions are:

1. On the Federal W4 requested by my new employer, I've added my estimated income in Step 4 (other income not from jobs), then calculated the extra withholding amount by multiplying the estimated income by 14.13% and dividing that by the number of pay periods. Just want to confirm this is correct.

2. My wife's income is a little bit higher than mine, so I did the Multiple Jobs Worksheet, Entered the value on Line 1, divided by the number of pay periods and entered that amount on line 4. Does that both the amounts for the additional withholding will be the amount from my self-employment income + the one from the multiple jobs worksheet?

3. If I am having additional withholding for my self-employment income, do I still need to make quarterly estimated tax payments?

4. Do I need to have additional withholding for my state W4 (Massachusetts)? I saw a place to enter it, but didn't see a worksheet on how to calculate it. And should I claim one exemption, for myself?

5. Does any additional withholding have to be set up for my wife's W4 (if her income is higher than mine)? 

[conniem123]

Hi Evading Deer,

I hope you are having a great day!

1.  The Extra withholding you enter on line 4(c) will help offset the federal tax and self-employment tax on your self employed income. Great job!

2.  You can enter the Extra withholdings for both your self employment income and the Extra withholdings from the multiple jobs worksheet; or you can enter Extra withholdings for one portion on one Form W-4 and the other Extra withholdings for the second portion on the other Form W-4 for a different employer.

3.  If you have having the Extra withholdings from your job as an employee to cover your self employment tax , you are not required to make quarterly estimated tax payments.  When you file your 2023 tax return, all your income is reported, and the withholdings offset the tax liability regardless of the source.

4.  Here is a resource to determine if any additional withholdings from your MA state is needed; https://www.mass.gov/guides/withholding-taxes-on-wages#-calculating-withholding-from-wages-.  You can also look at your 2022 tax return if you owed MA state tax.

5.  The Extra Withholdings you calculate using the W-4 Tax Calculator, https://turbotax.intuit.com/tax-tools/calculators/w4/,  will only be entered on one of the Form W-4s Step 4(c).  You would not enter the same amount of W-4s submitted to different employers as then double the extra needed would be withheld.

I hope you find this helpful!