I'm setting up my federal tax withholdings with my employer for 2021 using the new W4 form. I'm confused about line 4b. Based on the tax as accurately as I can figure it, if I select married-filing-jointly and figure in the $4000 in tax credits I know I am due on line 3, I will end up overpaying my taxes.
To make it come out just right (my goal here is to break even with the IRS - no refund, no bill to pay in April) I need to plan on having about $1000 in additional deductions annually. Not credits, but additional deductions. So, I'd like my W4 to reflect...
- Standard deduction
- about $1000 in additional, annual deductions above and beyond the standard deduction.
Do I write in this amount, $1000, for line 4B? Would my employer then compute my taxable income as as my gross income, minus standard deduction, minus this $1000? And then they would compute the tax, subtract the $4000 tax credits and divide this final amount over the number of paychecks?
My worry is that I've figured it wrong and this $1000 appears to be my "total" deductions in place of the standard deduction, resulting in overpaying massively on my first paycheck.