How to get a uniform amount of money for each paycheck given the social security threshold?

Question

Near the end of last year, my paycheck stopped including Social Security Tax, causing my net pay to increase. I just learned that there is an annual threshold for contributions to FICA/SS

This caused me to get one amount per paycheck, and then another after that threshold was reached. I can change my federal filing status to contribute more or less money throughout the year, so I'm wondering if there is a schedule/formula I can use to change my withholdings to allow my paychecks to be as uniform as possible for budgeting reasons. Does anyone know how this can be calculated?

I know I would start by claiming many exemptions and then claiming less exemptions by the end of the year, but I'm not sure if my paycheck would consider my past tax contributions when I change the filing status and when to make the changes.

Answer 1

You could simply calculate the point at which it will occur, and how much you will get back, and then adjust your withholding slightly down early in the year by claiming one additional allowance, and then adjusting up by the difference in the last few paychecks (it should be easy for you to see that difference, and easy to calculate when it will occur).

However, my suggestion is to do something different: direct the "bonus" savings into an IRA/401K account, or if you've maxed all of that out, into a savings account. Don't budget for it, just treat it like an unexpected windfall and put it in your emergency stash or savings account - or use it for charitable donations (if you do those annually, you could simply wait until the tax drops off and make the donations then). Since you seem to be doing fine without this money now (as you weren't expecting it), keep on doing what you're doing now and don't consider it in your budgeting. Take a winter vacation, if nothing else!