Employers withhold at rates specified in Circular E issued by the IR. You can request that
additional money be withheld (not an issue here) or you can have
reduced withholding by claiming additional allowances on a W-4 (i.e.,
more than just for you and spouse and dependents) if you believe that
this will result in withholding that will more closely match the tax due.
(Note added in edit):Page 2 of the W-4 form has worksheets that can
be used to figure out how many additional allowances to request.
Also, I wonder if your withholding will be 37% or final tax bill be
26% of your adjusted gross income. The tax brackets are the tax
on marginal income. If
you are in the 28% tax bracket, you owe 28 cents in tax for each additional dollar of income, not 28 cents in tax for every dollar of income. Your
overall tax might well be less than 20% of your income. As a specific
example, in 2011 a married taxpayer filing jointly would be in the
(highest) 35%
tax bracket if the taxable income was $379,150 or more (marginal tax rate
of 35% is applicable to every dollar more than $379,150) but the tax on
$379,150 itself works out to be $102,574 or 27.05% of the taxable income.
So if you do expect to be earning around $350K or more in salary
between now and December 31 to hit that 26% that you expect you will
owe, you might want to consider paying a tax accountant for advice on how
to fill out your W-4 form for your new employer rather than relying
on an Internet forum such as this for free advice.
Note added in edit: Your comment "... it is a cocktail
of ... federal taxes, state taxes, local taxes, health care
..." on the earlier version of my answer does raise the question
of whether you want your employer to withhold 26% instead of
37% and have the money go to meet all these obligations or just
26% towards your Federal income tax liability only.
The Federal W-4 form affects only how much money is withheld
from your paycheck and sent to the US Treasury. Some of the
money that each of your employers withholds (Social Security and
Medicare taxes) is not affected by what you put down on
the W-4 form. Now, if you hold two jobs and the total income
shown on your W-2s is larger than the SS limit, you will
have had too much Social Security
taxes withheld, and the excess will be a credit towards your
Federal income tax liability. You have self-employment income
too on which you owe Social Security and Medicare taxes and you
are making estimated tax payments. The excess Social Security
tax payment can count towards this too (as well as income
tax on your Schedule C income). Thus, if your new employer is
withholding too much, you might be able to skip making the
fourth quarterly payment of estimated tax or make a reduced
payment (there is no requirement that the four installments
must be equal). In short, there are lots of ramifications
that you need to take into account before deciding that
26% is the right number. Instead of filling out a W-4
all by yourself right away, I strongly recommend
reading up a lot on income taxes, or play with a tax
preparation program (last year's version will do a
pretty good job of at least getting you in the right
ballpark), or consult with a tax accountant.
