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My husband took a new job recently and is making 125K in salary in California. I make 65K. When we were filling his W4 (married filing joint), the additional withholding on his W4 came to 'additional $400' per paycheck under MFJ. Why is this amount withheld in additional, as I pay my taxes separately?
Thanks in advance.
When the question of withholding comes up, I usually reach over to my night table and read from my copy of Circular E, otherwise known as Publication 15. This publication will show you what will be withheld based on your filing status, income, and number of allowances (exemptions) claimed. I suggest you do a dry run of your 2012 tax return, entering the projected income numbers, and see what your federal tax bill will be. From there, it shouldn't be tough to get your withholdings on track.
You are having taxes withheld separately on your income, but the amount that you are obligated to pay is the total shown on your MFJ return. Of course, the amounts withheld are credited against the tax due for that year, and you might have to pay more on April 15, or get a refund back if you were over-withheld. Also, on an MFJ return, you and your husband both are individually legally bound to pay the entire amount, not just your individual share of the total amount.
The marginal tax rates increase with increasing income. Since your $65K and your husband's $125K get summed up on a MFJ return, the tax due on your MFJ return is greater than the sum of taxes due on MFJ returns showing incomes of $65K and $125K respectively. I don't know how the $400 figure you quote was arrived at, but I would suspect that if you have any investment income through mutual funds at all, you both would be better off requesting to have taxes withheld at the "Married but withhold as if I were a single person" rate so as to avoid a penalty for paying too little tax or having to scrabble to make a 4th quarter Estimated Tax Payment once the mutual funds make their annual distributions in December. In either case, you would likely need to file Form 2210 to avoid penalties for not paying taxes in timely fashion.
