Author Topic: Just got married! (W4 Question)  (Read 3753 times)

TheAnonOne

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Just got married! (W4 Question)
« on: July 06, 2015, 02:16:05 PM »
I got married in early June!

Short and sweet, I make nearly 200k, she makes 40k. Should we both change our W4s from (currently: SINGLE with 1 allowance) to Married with 1? (As opposed to waiting for the start of 2016)

We have no kids, (not sure if that matters...)

Thanks!
« Last Edit: July 06, 2015, 02:18:01 PM by TheAnonOne »

johnny847

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Re: Just got married! (W4 Question)
« Reply #1 on: July 06, 2015, 02:24:28 PM »
The only way to do this correctly  is to project your 2015 tax bill and then look up how your employer is instructed to withhold taxes from your paycheck.

You can sometimes get close with a paycheck withholding calculator you can find online (easily comes up with Google) but the more complicated your tax situation is the less accurate the calculator is likely to be.

forummm

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Re: Just got married! (W4 Question)
« Reply #2 on: July 06, 2015, 02:28:59 PM »
Congrats! And congrats on having a huge income differential--that means you probably save a lot on taxes by getting married.

http://www.nytimes.com/interactive/2015/04/16/upshot/marriage-penalty-couples-income.html

I wouldn't change anything for this year. See what your situation is at the end of the year and then adjust as needed. Looks like you'll be saving around $2k by getting married. You may even decide to decrease your holdings next year.

MDM

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Re: Just got married! (W4 Question)
« Reply #3 on: July 06, 2015, 02:50:05 PM »
The only way to do this correctly  is to project your 2015 tax bill and then look up how your employer is instructed to withhold taxes from your paycheck.

+1

Do you have significant other income or itemized deductions?  If not, especially given the 7 months that will have been withheld at the single rate, changing each W-4 to "Married with 1" (as suggested in the OP) should be fine and will at least reduce the size of the zero-interest loan you are giving to the IRS.

See http://forum.mrmoneymustache.com/ask-a-mustachian/how-can-we-optimize-our-withholdings/ and links therein for similar discussion.



Apples

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Re: Just got married! (W4 Question)
« Reply #4 on: July 07, 2015, 12:39:42 PM »
Check out the IRS withholding calculator.  It was pretty helpful for my husband and I when we got married June of last year. Congrats! :)

TheAnonOne

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Re: Just got married! (W4 Question)
« Reply #5 on: July 08, 2015, 09:14:32 AM »
The only way to do this correctly  is to project your 2015 tax bill and then look up how your employer is instructed to withhold taxes from your paycheck.

+1

Do you have significant other income or itemized deductions?  If not, especially given the 7 months that will have been withheld at the single rate, changing each W-4 to "Married with 1" (as suggested in the OP) should be fine and will at least reduce the size of the zero-interest loan you are giving to the IRS.

See http://forum.mrmoneymustache.com/ask-a-mustachian/how-can-we-optimize-our-withholdings/ and links therein for similar discussion.

I have a reasonable amount of deductions. Enough that I can go the itemized route, but I am not sure how it works when filing jointly... (She has basically no deductions)

I also max my 401k, but she can't, her company only allows a max of 30% contributions, which is only about 10-12k. So that pulls our incomes in different ways. (Hoping to get her a raise to 60+ so she can max it)

johnny847

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Re: Just got married! (W4 Question)
« Reply #6 on: July 08, 2015, 09:52:30 AM »
The only way to do this correctly  is to project your 2015 tax bill and then look up how your employer is instructed to withhold taxes from your paycheck.

+1

Do you have significant other income or itemized deductions?  If not, especially given the 7 months that will have been withheld at the single rate, changing each W-4 to "Married with 1" (as suggested in the OP) should be fine and will at least reduce the size of the zero-interest loan you are giving to the IRS.

See http://forum.mrmoneymustache.com/ask-a-mustachian/how-can-we-optimize-our-withholdings/ and links therein for similar discussion.

I have a reasonable amount of deductions. Enough that I can go the itemized route, but I am not sure how it works when filing jointly... (She has basically no deductions)

I also max my 401k, but she can't, her company only allows a max of 30% contributions, which is only about 10-12k. So that pulls our incomes in different ways. (Hoping to get her a raise to 60+ so she can max it)

When itemizing as a married couple, it's the same process as before, except with two people's worth of deductions. Just claim all the deductions that you and your spouse can claim.
The difference is that the decision to take the standard deduction vs itemize is based on a new comparison: the standard deduction for a married couple is double that of a single person. So for 2015, the standard deduction is 12600.
This is one example of how getting married can hurt you in taxes - suppose you itemized and your spouse didn't before you two got married. Furthermore, your sum of itemized deductions was between 6300 and 12600. Now, after you're married, it's not advantageous for you to itemize, because you now have to overcome a standard deduction of $12600, not $6300.

If you provide more details about your tax situation we may be able to help you figure out your paycheck withholdings.

MDM

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Re: Just got married! (W4 Question)
« Reply #7 on: July 08, 2015, 11:05:36 AM »
I have a reasonable amount of deductions. Enough that I can go the itemized route, but I am not sure how it works when filing jointly...

In that case, you have two homework assignments:
1)  See http://forum.mrmoneymustache.com/taxes/the-mustache-tax-guide-(u-s-version)/ for some suggestions and links.  Read those.
2)  The two of you fill out a tax return with MFJ status.  If either of you used software for your 2014 return, go back to that software and create a new return for your joint situation.  Yes, it will be 2014 tax brackets but that will be a big improvement vs. looking at returns with single status.

Any questions after that, just ask. :)


Sibley

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Re: Just got married! (W4 Question)
« Reply #8 on: July 08, 2015, 12:07:43 PM »
I have a reasonable amount of deductions. Enough that I can go the itemized route, but I am not sure how it works when filing jointly...

In that case, you have two homework assignments:
1)  See http://forum.mrmoneymustache.com/taxes/the-mustache-tax-guide-(u-s-version)/ for some suggestions and links.  Read those.
2)  The two of you fill out a tax return with MFJ status.  If either of you used software for your 2014 return, go back to that software and create a new return for your joint situation.  Yes, it will be 2014 tax brackets but that will be a big improvement vs. looking at returns with single status.

Any questions after that, just ask. :)

Yeah, if you're both expecting similar incomes, etc this year, then a MFJ 2014 dummy return will give you a pretty good idea for 2015.

Regarding W-4, my philosophy is I do not want to owe at the end of the year. Others have a different view. Regardless of your view, don't owe enough to have to pay penalties - that just a waste of money.

bzzzt

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Re: Just got married! (W4 Question)
« Reply #9 on: July 09, 2015, 08:04:57 PM »
If your wife has any student loans, I would speed up the payments. Welcome to not being able to dedect the interest because you're too successful.

TheAnonOne

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Re: Just got married! (W4 Question)
« Reply #10 on: July 09, 2015, 08:18:04 PM »
If your wife has any student loans, I would speed up the payments. Welcome to not being able to dedect the interest because you're too successful.

Great advice!

We actually don't have any debt other than the house. Though, for many couples that might be a huge issue.

JennaF

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Re: Just got married! (W4 Question)
« Reply #11 on: July 10, 2015, 02:55:16 AM »
congrats with your marriage!

Thegoblinchief

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Re: Just got married! (W4 Question)
« Reply #12 on: July 14, 2015, 06:51:36 AM »
Dummy return for last year is good advice. If it looks like you'll be overpaying dramatically on withholding, use the IRS calculator to tell you how to modify your w-4. We just adjusted my wife's return from 5 to 13 allowances.