Withholding is Evenly Divided between Spouses
Tax withheld on wages is split evenly between both spouses, and each spouse will take a credit for half of the total withholding. The rationale is straightforward: wages are divided fifty-fifty between the spouses, and likewise withholding is evenly split.Allocating Estimated Tax Payments
The rules for dividing up estimated payments are a little more complicated. I'll state the easiest rule first. If a spouse paid estimated tax separately, then that spouse will claim the estimated tax on his or her separate return. By paid separately I mean that on the 1040-ES estimated tax voucher, there's only one spouse's name and Social Security number.If estimated taxes were paid jointly (both spouses names and Social Security numbers are listed on the payment voucher), then the married couple can decide to allocate the estimates in any manner. Naturally, you will have to arrive at a mutual agreement for how to allocate the tax payments so that your numbers will match up when the IRS processes your separate returns. If you cannot agree on a mutually acceptable method for dividing your estimated payments, you should use the following IRS-approved formula found in Publication 555, page 6:
total estimated tax payments x your separate tax liability / combined tax liabilities.
This formula basically allocates estimated payments based on a ratio of each spouse's separate tax liability to both spouses' combined tax liabilities.
