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W4 Question
Posted on 3/17/16 at 4:58 pm
Posted on 3/17/16 at 4:58 pm
I got married in January and I was talking to a guy I work with and he said I was screwing up for not claiming allowances. I was at 1 for just myself.
How many should I be claiming? My wife is at 42k a year and I am around 125k a year (give or take depending on OT).
How many should I be claiming? My wife is at 42k a year and I am around 125k a year (give or take depending on OT).
5
Posted on 3/17/16 at 5:20 pm to TheDeathValley
IRS Withholding Calculator
I believe I set my own allowances to 4 due to being married with one child who is in daycare.
This gives a very general breakdown: LINK
I believe I set my own allowances to 4 due to being married with one child who is in daycare.
This gives a very general breakdown: LINK
Posted on 3/17/16 at 5:49 pm to TheDeathValley
quote:
I was talking to a guy I work with and he said I was screwing up for not claiming allowances. I was at 1 for just myself.
You get the money back during tax season anyways that you miss out. Each of those exemptions is about ~$4000 in deductions. It honestly isn't a big deal
But you have those "Don't give an interest free loan to the gubment!!!!" crazies
Say you missed on two exemptions to claim = $8000 in deductions. Given a likely 25% tax bracket, that is equal to $2000 in extra taxes. Even if you got 8% returns on that money, because it is a monthly overage, you would end up only losing on $100 in interest
Posted on 3/17/16 at 6:01 pm to TheDeathValley
You should claim 0 and additional withholding IMO
With that wage gap, you're gonna end up owing a good bit if you are claiming deductions most likely
Your wife's income is being taxed at a much lower rate than it should be
With that wage gap, you're gonna end up owing a good bit if you are claiming deductions most likely
Your wife's income is being taxed at a much lower rate than it should be
This post was edited on 3/17/16 at 6:10 pm
Posted on 3/17/16 at 6:16 pm to Croacka
I think you have it backwards. His wife's lower income will average his down, no?
ETA: eh, looking at the tables, not in this case. Would have to be wayyy more drastic than what I was thinking.
ETA: eh, looking at the tables, not in this case. Would have to be wayyy more drastic than what I was thinking.
This post was edited on 3/17/16 at 6:22 pm
Posted on 3/17/16 at 6:18 pm to TigerDeBaiter
His wife's payroll will tax her at a 42k tax rate
If they are filing jointly, they will be in a much higher tax bracket than 42k, so taxes on her wages will be severely underwithheld
You could look at it either way and get the same result
If they are filing jointly, they will be in a much higher tax bracket than 42k, so taxes on her wages will be severely underwithheld
You could look at it either way and get the same result
Posted on 3/17/16 at 6:21 pm to GenesChin
quote:
Say you missed on two exemptions to claim = $8000 in deductions. Given a likely 25% tax bracket, that is equal to $2000 in extra taxes. Even if you got 8% returns on that money, because it is a monthly overage, you would end up only losing on $100 in interest
What happens if you do that for 40 years?
Posted on 3/17/16 at 6:23 pm to Teddy Ruxpin
My sister was so proud of her 6200 dollar return
I couldn't convince her to give herself a 500/month "raise"
She likes it that way so I left it alone.
Eta: I was thrilled with my <500 refund
I couldn't convince her to give herself a 500/month "raise"
She likes it that way so I left it alone.
Eta: I was thrilled with my <500 refund
This post was edited on 3/17/16 at 6:24 pm
Posted on 3/17/16 at 6:26 pm to Croacka
quote:
His wife's payroll will tax her at a 42k tax rate
If they are filing jointly, they will be in a much higher tax bracket than 42k, so taxes on her wages will be severely underwithheld
Only 3% higher on that $42k, so $1260. If they both claim 0 allowances and actually itemize I think they'd be about right.
This post was edited on 3/17/16 at 6:28 pm
Posted on 3/17/16 at 6:42 pm to Croacka
I get pretty big refunds but that's because I'm convinced when I leave my current guy those refunds aren't going to be so big.
I think I have it generally "right," he's just aggressive.
I think I have it generally "right," he's just aggressive.
Posted on 3/17/16 at 6:44 pm to TigerDeBaiter
How are you getting 3%?
She should be in the 15% tax bracket if filing married.
Technically her income should be taxed mostly in the 25 and 28% bracket, marginally of course
She should be in the 15% tax bracket if filing married.
Technically her income should be taxed mostly in the 25 and 28% bracket, marginally of course
Posted on 3/17/16 at 7:04 pm to TheDeathValley
I was looking at the single tables. Unless they both just got new jobs I was thinking their W-4's would reflect single. 
Posted on 3/17/16 at 7:11 pm to TigerDeBaiter
I'm sure every situation is different, but from my perspective with a similar disparity, we got a surprise tax bill after expecting a refund.
Posted on 3/17/16 at 9:00 pm to Croacka
So it pretty much boils down to:
Claim allowances now (2) receive little to no refund on joint tax return
Claim (0) pay now get money back
Claim allowances now (2) receive little to no refund on joint tax return
Claim (0) pay now get money back
Posted on 3/18/16 at 7:02 am to TheDeathValley
If you don't have a ton of deductions, and you both claim married and 0, you will most likely still owe.
If you are both claiming single and zero, they may withhold enough, but I'm not entirely sure
If you are both claiming single and zero, they may withhold enough, but I'm not entirely sure
Posted on 3/18/16 at 7:48 am to TheDeathValley
I'm in a similar boat as you, but not quite as an extreme salary difference. Will be getting married in January of next year but many suggested a paper marriage in December for a giant tax break, but after reading this and fiddling with the IRS calculator, it may not be so cut and dry.
Posted on 3/18/16 at 10:34 am to Croacka
quote:
Eta: I was thrilled with my <500 refund
I used to want a big ole refund check but I've swung the other way now. I'd much rather be right around what I owe and have it through the year. I don't need to be giving the government an interest free loan all year.
Posted on 3/19/16 at 11:13 am to Brettesaurus Rex
quote:
I used to want a big ole refund check but I've swung the other way now.
I'm in the same boat. I just changed all my allocations to minimize my returns, hell I wouldn't even mind having to pay around $100 each just so I don't have to wait.
Check out pay check calculator
Input the current deductions for yourself and your wife separately, then annualized the Fed & State withholdings . It is not an exact science bc things can change form year-to-year (especially if you itemize), but you should be able to mess around with the figures enough here to maximize your paycheck and minimize your return
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