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I have some questions regarding how I can figure out if I am withholding enough taxes.
Here are the facts I think are relevant:
Starting this year my wife is a part time independant contractor, anticipating earning about $10000 in 2010.
She continues to collect some Unemployment benefits which should also be close to $10000 for 2010.
For 2009 we got a refund of $1700 primarily because of the job loss in July and purchasing a new house in September.
We have a new dependant as of 2/19/10.
I work a regular employee job.
I would like to just adjust my withholding to cover the taxes for both of us. Am I correct that this can cover any SE taxes she might owe?

I have been working with the IRS withholding calculator, but some things are not clear.
For example when it asks for "total Federal income tax withheld" is that asking just for the "Fed withholding" or do I add up the SS and MEDI amounts as well?

Either way I do it says our anticipated income tax is $0. Does that seem right?

Thank you for any insight,
Mosquito
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I would like to just adjust my withholding to cover the taxes for both of us. Am I correct that this can cover any SE taxes she might owe?

I do this with my husband's withholding(I have been self-employed for 6 years), however, because my earnings are quite variable, I just make sure we are in safe harbor but I also make sure I have plenty in savings to cover any additional tax owed.

rad
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One thing I will caution you about is many states will limit your unemployment when you are self employed. Make sure you report this to your unemployment office or they can come back after you with fines.

Dusty
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One thing I will caution you about is many states will limit your unemployment when you are self employed. Make sure you report this to your unemployment office or they can come back after you with fines.

Thanks, yes we are aware. It is not so much being self employed as just being employed that effects the benefit.
She is working about 15 hours a week, which reduces the unemployment by about 50% of each dollar earned. The net effect is she earns basically minimum wage. Still better than nothing though.

Thanks,
Mosquito
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One thing I will caution you about is many states will limit your unemployment when you are self employed. Make sure you report this to your unemployment office or they can come back after you with fines.

Dusty


Limit to zero, that is--at least in the state of Texas.

Karen
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