60

The W-4 functions best when there is a single earner with a single job. When there are multiple earners and/or multiple jobs per earner, it doesn't function quite as well (without additional withholdings). The employer, who is deducting taxes from your paycheck, is only aware of the pay that you are earning from them. Consider the case where an individual ...


39

The withholding is not that accurate. Look at the personal allowances worksheet (PDF). A single allowance could be You, filing. You, filing married; spouse not working. You, filing Head of Household. A dependent. $2000 or more of creditable dependent expenses. A child, if you make less than $70k and have 2-4 children. Half a child, if you make ...


37

If your total tax due (above what was withheld or otherwise paid through estimated tax payments or similar) for 2017 is less than $1000, you won't owe any penalties. However, if you owe more than $1000, you have a few other protections. If your total tax withheld or otherwise paid in advance was at least 90% of your current year tax bill, or at least 100% ...


21

This stems from the (possibly incorrect) assumption that my work is withdrawing taxes from each paycheck correctly. I think this stems rather from an ambiguity in the use of the word "correctly". I would expect that your employer withholds correctly in that it complies with the Internal Revenue code, and particularly the regulations for calculating and ...


21

This is functionally the same as submitting a W4 claiming 0. The employee is defaulted to the highest withholding for taxes. Some people like the quasi-forced-savings aspect of excess withholdings and the resulting refund check(s). It doesn't make an ounce of difference to the employer.


14

What happened was Tax Reform, implemented in 2018. The new tax code pushed through a new withholding table contained within Publication 15. Payroll departments withheld according to the new table and people across the country cheered their 'higher take home pay'. Then when tax time came, it became clear that their total tax bill for the year was little ...


12

As @littleadv's comment on your question said, it is unlikely that you and your husband paid a total of $5K in income tax on $185K of wages in 2013. More likely, your 2013 tax return (assumed to be a Married Filing Jointly tax return) showed that you had not arranged to have enough tax withheld from your salaries and thus you still owed $5K to the IRS for ...


12

Two things I can think of: You might have changes to your AGI that the payroll system doesn't know about. Extra income like dividends or a side job, for example. You filled out your W-4 incorrectly, or haven't updated it lately. As @JPhi1618 mentioned, overtime pay will throw a wrench in the calculations. EDIT: this is based on OP's qualifications: an ...


12

There's two cases to consider where co-workers aren't really employees of the company: Self-employed These workers are independent contractors paid via a 1099. As self employed, they pay tax directly to the IRS and compute the appropriate allowances themselves. Contract Employees These employees are paid by a contractor or staffing service and would have ...


11

You may have to pay a penalty of $500 if both of the following apply. What the IRS really cares about is you not withholding enough, so that you send them a big check (EDIT: during tax season). https://www.irs.gov/taxtopics/tc300/tc306 The United States income tax system is a pay-as-you-go tax system If you didn't pay enough tax throughout the year,...


10

Neither of you are exactly right (if you've interpreted your friend's theory correctly). Depending on the number of allowances you claim, a portion of your paycheck will be withheld each period for taxes. When you file, your total income, exemptions, and deductions will be used to determine how much tax you actually owe for the year. The total amount ...


8

Yes it is legal and appropriate. You use the exemptions on the w-4 to try and make the amount you owe, or the the refund you will get to be near zero. It isn't an exact science because in some companies you need to have a person in payroll make the change, and if they delay it by a week your calculations can get messed up. The rule of thumb is that each ...


8

If you work an hourly job with even a slight variation of hours per week, withholding calculations tend to be less accurate. The payroll system doesn't know what your final income for the year will be. Lets say that one week you get super busy and have 10 hours of overtime. Some payroll systems will calculate withholding on that large check as if that's ...


8

Circular E, Employer's Tax Guide, aka, Pub 15, contains the tables that payroll uses. Go to the page with your income level, and confirm that your 10 allowances match to the column for withholding per paycheck. I'd then reduce the allowances accordingly. $5000 is the tax on about $23K (at 22% bracket), so dropping allowances by 6 (each allowance is $4000 ...


7

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 ...


7

Generally the advice is that each allowance on the W-4 represents a personal exemption amount. In 2016 that number is $4,050. A person that takes the standard deduction and exemptions for themselves and their spouse will have approximately the correct amount withheld. If they have enough deductions to itemize, or they have kids that get tax credits, or ...


6

In 2013, an allowance/exemption is like saying, "Please don't tax $3,900 this year." So 8 allowances is $31K not taxed. It doesn't wipe out your tax withholding. Circular E will show you the exact amount they'll withhold based on the allowances you claim. Keep in mind, the withholding is run-rated. i.e. it assumes a full year of work. If you had no ...


6

Keep in mind, the W4 will get you to an accuracy of one exemption, i.e. the tax you'll pay or not pay, on $3800. So, for a 25% marginal rate taxpayer, you can get as close as $950, but would need to tinker a bit to get closer. You say you had too much withheld. I suggest you take to amount of your refund, divide by 1000 and just bump your exemptions by ...


6

It seems like your State specifically ties the values on the AR4EC form to the dependents exemptions on your tax return. They clearly state in the instructions: Do not claim more than the correct number of exemptions In California, DE4 form doesn't talk about exemptions, but allowances, which is not the same. And you can claim, technically, as many ...


6

I will handle your questions point-by-point: Plus reported tips $239 (I have never reported any) If you are working in a position that you collect tips, some of the tips you receive are from people that pay via debit card or credit card. Many of them include the tip on the charge slip. The management then credits the employee with those tips. You might ...


6

Don't use the guide on the W-4 itself to calculate your exemptions. It's often wildly inaccurate. Instead, use a Payroll Deduction Calculator like this one. Adjust the number of exemptions until the witholding is more reasonable, based on last year's tax return numbers.


6

No, you need to specify a number of allowances, and the additional amount. Line 6 is extra beyond what the amount from the allowances is. The correct way to have a particular amount withheld from your paycheck is to determine what number of allowances will cause that amount to be withheld. It's rather silly, but... For what it's worth, the IRS has ...


6

If you want your employer to withhold more, you don't want to increase what you are calling "exemptions". (They are officially called "allowances.") If you increased them, your employer would withhold even less, so you would owe more at tax time next year, all other things being equal. To have you employer withhold more (so you don't owe as much at tax time ...


6

To claim a refund, you typically have up to three years from the time you filed your original return, or within two years from the date you paid the tax — whichever is later — to go back and amend it. https://www.creditkarma.com/tax/i/filing-amended-tax-return/ It quite likely is easier to find a tax professional in May, since their peak season is March ...


5

You should file one now, calculating based on the current situation. Then, at the end of the year, recalculate, and only file if changes are needed. Not filing now means you continue withholding at the single rate, and will basically be paying much more than you should. You'll get it all refunded of course, but why give interest free loans to the government?...


5

I will answer this question broadly for various jurisdictions, and also specifically for the US, given the OP's tax home: Generally, for any tax jurisdiction If your tax system relies on periodic prepayments through the year, and a final top-up/refund at the end of the year (ie: basically every country), you have 3 theoretical goals with how much you pre-...


5

Not according the Massachusetts Department of Revenue: Taxpayers may file as head of household if they meet all of the following criteria: the taxpayer is unmarried or considered unmarried on the last day of the year; the taxpayer paid more than half the cost of keeping up a home for the year, and a qualifying person lived with the taxpayer in ...


5

There's nothing your company can do to fix this. You have to pay the tax due directly to the IRS. If you had little or no income for the previous year, 2016 (and thus little or no total tax), then you won't owe any penalties or interest as long as you pay the full tax due for 2017 by April 17, 2018. If your withholding for 2017 was less than your total tax ...


5

You basically give your best shot at each of these questions: Some of these numbers are factual, e.g. income tax withheld to date. Others are a matter of planning on your end, e.g. the amount of 401(k) contributions. Finally, the rest are projections, e.g., your gross wages for the entire 2018. You may want to stay on the safe side, which actually means ...


5

First, let me clear up a misunderstanding in your question. Is there a way to check with the IRS to see if they indeed receive my file as Exempt and if they did actually return it to my Employer? I’m just wondering if either HR forgot to follow up with me or even IF the IRS does actually cull these exempt requests in the first place? The W-4 form does ...


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