I want to lower the amount of taxes I pay in a year. Currently I claim 1 federal and IL allowances Additional amounts deducted for FED and State (ILLINOIS): $0.00.
I'm single and don't have any children
I don't pay local/city tax
I'm in the 25% marginal tax bracket
My state tax is 3.25%
Here is the break down of how much I'm paying, which I think is too high, and would rather have more money to invest into my Roth, save for emergency fund, etc.
Gross Earnings: $2,230.76
All insurance payments are taken out pre-tax bi-weekly. $133.45
Fed Taxable Gross: $2,101.28
Total taxes: $543.61
Total Deductions: $133.64
Total Deductions include the following:
Before Tax Deductions: After Tax: 401k $66.92 LTD $2.46 Med $45.77 Dental $6.66 Vision $5.83 Life $4.72 Grp ADD $1.28
Reducing the amount refunded to me at the end of the year is my goal, which I want done by reducing the amount withheld from each check (ideally ~$0.00 as close as I can get). Is filing 0 really the solution to this? I'm not sure how to calculate my tax check afterwards.
Right now I'm paying 543.61*26 = $14,133.86 in taxes a year. Does paying this much/year in taxes seem steep?
Here's what I figure I'll owe. $58,000-$6,300(Standard Deduction) = $51,700. $51,700 - $37,650 (up to 15% marginal tax rate) = $14,050 $14,050 * .25 (Federal Marginal Tax Rate) = $3,512.50 $3,512.50 + $5,183.75 (amount owed from $0-$36,751) = $8,696.25 $58,000 * .0375 (IL Income tax = 3.75) = $2,175 $8,696.25 + $2,175 = $10,871.25 Taxes owed (Federal and State) $14,133.86 (taxes paid) - $10,871.25 (taxes owed) = $3,262.61 Refund FED withholding : $302.10 FED MED/EE: $31.43 FED OASDI/EE:$134.42 IL Withholding: $75.66
This is simplified and doesn't take into consideration that I will be paying student loan interest, which will increase my tax refund.