Author Topic: A Question about our Tax Rate  (Read 1129 times)

13ft7wt

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A Question about our Tax Rate
« on: July 17, 2017, 07:46:41 AM »
My wife and I have similar salaries and file jointly, but are being federally taxed at different rates on each bi-weekly paycheck. She makes less than I do, and has more taken out in federal taxes. What may be going on here?

Me:
Gross: 3715.95
After Pre-tax Deductions: 2892.11 (dental, vision, medical, life, disability, 403b)
Federal Taxes Withheld: 342.21
Rate: 11.8%

Spouse:
Gross: 3458.09
After Pre-tax Deductions: 2472.78 (dental, medical, dues, 403b)
Federal Taxes Withheld: 437.84
Rate: 17.8%

Any ideas?

Thanks.

CareCPA

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Re: A Question about our Tax Rate
« Reply #1 on: July 17, 2017, 08:16:25 AM »
First guess is that you filled out your W-4's differently. I would double check them both to see if either of them is right, and correct the other.
Always happy to help with tax or accounting questions - feel free to private message me.

I am a licensed CPA in Pennsylvania. However, any tax advice I give should be considered general information and not used in the avoidance of tax. There is most likely information about your situation that I do not know, and thus you should do your own additional research.

Yes, in case it confuses you, I did change my forum name.

terran

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Re: A Question about our Tax Rate
« Reply #2 on: July 17, 2017, 10:27:56 AM »
Also, remember that this is your withholding rate, not your tax rate. They are only related to the extent that if you withhold too much you will get a refund and if you don't withhold enough you will owe what you didn't have withheld and maybe a penalty for underpayment.

13ft7wt

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Re: A Question about our Tax Rate
« Reply #3 on: July 17, 2017, 11:13:15 AM »
Terran, so you mean that as long as we're doing our taxes correctly, we're not missing any cash that we would have otherwise received?

Psychstache

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Re: A Question about our Tax Rate
« Reply #4 on: July 17, 2017, 11:21:24 AM »
Terran, so you mean that as long as we're doing our taxes correctly, we're not missing any cash that we would have otherwise received?
Yes, the withholdings are just a placeholder. When you actually file, you are squaring up with the IRS on your actual tax liability, either by paying or receiving the difference.

The only 'loss' you might be incurring the opportunity cost of lost investment of you are receiving a big refund.

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MDM

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Re: A Question about our Tax Rate
« Reply #5 on: July 17, 2017, 11:59:34 AM »
Terran, so you mean that as long as we're doing our taxes correctly, we're not missing any cash that we would have otherwise received?
Yes, the withholdings are just a placeholder. When you actually file, you are squaring up with the IRS on your actual tax liability, either by paying or receiving the difference.
+1

13ft7wt, see lines 63 and 74 of your most recent Form 1040 (and line 75 or 78, as applicable) - does that help?

terran

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Re: A Question about our Tax Rate
« Reply #6 on: July 17, 2017, 12:06:12 PM »
Terran, so you mean that as long as we're doing our taxes correctly, we're not missing any cash that we would have otherwise received?
Yes, the withholdings are just a placeholder. When you actually file, you are squaring up with the IRS on your actual tax liability, either by paying or receiving the difference.

The only 'loss' you might be incurring the opportunity cost of lost investment of you are receiving a big refund.

What he/she said.

With the other potential loss being a penalty if you under-withhold by too much.

VoteCthulu

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Re: A Question about our Tax Rate
« Reply #7 on: August 01, 2017, 12:34:49 PM »
Or the opportunity cost of withholding too much and essentially giving the government a 0% interest loan.

Proud Foot

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Re: A Question about our Tax Rate
« Reply #8 on: August 02, 2017, 12:12:16 PM »
Agree with all the others who have said your W-4's are most likely filled out differently.  Also based upon the information you gave us she has a higher taxable net than you do by $161 so her withholding will be higher even if your W-4's are exactly the same.

sisto

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Re: A Question about our Tax Rate
« Reply #9 on: August 03, 2017, 04:14:41 PM »
Terran, so you mean that as long as we're doing our taxes correctly, we're not missing any cash that we would have otherwise received?
Yes, the withholdings are just a placeholder. When you actually file, you are squaring up with the IRS on your actual tax liability, either by paying or receiving the difference.

The only 'loss' you might be incurring the opportunity cost of lost investment of you are receiving a big refund.

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This ^^
My brother actually goes in and adjusts his to like 10 when he knows he's going to be getting a ton of overtime. That way he gets more money in his pocket at the time, he later drops it back down. You just need to be careful so that you don't set it so low too much tax is taken out as others have mentioned or too high so that not enough is taken and you get penalized.
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