W-4 so confusing - need help please

[FiguringItOut]

I decided to change my W-4 form as it was set last year for Married status.  I will filing HOH with 1 dependent child in 2016, standard deduction, no side or investment income.

So I went through the form for Federal and then for NY State and my allowance changed from 2 to 3 for Federal and from 12 to 8 for State. 

I have no idea if this is correct.  It seems that now my check will be a lot smaller according to paycheckcity.com.  And nowhere on those forms did it ask me about my pretax deductions (only State asked about IRA contribution).  The thing is I entered that I will be maxing out my tIRA, but in reality I will have to split it between t and Roth IRA as I won't qualify for a full tIRA contribution.

I have a lot of pretax stuff taken out of my paycheck - max for 401K, max for HSA, transit, dependent care, medical premiums.  It all adds up, but these form do not account for such things.

I tried paycheckcity.com W-4 assistant, but they also don't ask about any pretax deductions and they came up with 5 allowances for Federal and I'm still not sure what's going on with State. 

Please advise on how to approach this.  I want to be as close to zero for tax refund as possible.  Mainly because I do all my savings pretax and I need every dollar from my actual paycheck to live on during the month.  Otherwise I'll have to rearrange my budget and savings strategy when I just got it to where I'm comfortable with it.

[dandarc]

Step 1: Estimate your 2016 tax bills.

Step 2: Input everything into paycheckcity or similar and see if you'll have enough withheld to cover federal and state tax estimates this year.  A good first step is to get it to match an actual pay stub - usually if it doesn't match your pay stub, you've missed a deduction or checked "not subject to tax" when you shouldn't have or something like that somewhere.

Step 3: Repeat step 2 until you find the answer as to allowances.

Step 4: Repeat 1-3 a couple more times this year, particularly if anything income or deduction/credit-wise changes.

[FiguringItOut]

Step 1: Estimate your 2016 tax bills.

Step 2: Input everything into paycheckcity or similar and see if you'll have enough withheld to cover federal and state tax estimates this year.  A good first step is to get it to match an actual pay stub - usually if it doesn't match your pay stub, you've missed a deduction or checked "not subject to tax" when you shouldn't have or something like that somewhere.

Step 3: Repeat step 2 until you find the answer as to allowances.

Step 4: Repeat 1-3 a couple more times this year, particularly if anything income or deduction/credit-wise changes.

So you suggesting on doing this 'backwards', right?  Instead of starting with W-4 and state forms, calculate what I want withheld and back into it?

This sounds like a project for this weekend then.  I wish these forms would be more comprehensive and allow to input these things directly into them. 

[FiguringItOut]

Can I use Turbo Tax or the like to estimate my 2016 taxes?  Or should I do it by hand?  I think I can do Federal pretty easy, but State and City will be a pain, I think.

[Tremeroy]

I recommending using the IRS's online Withholding Calculator: https://apps.irs.gov/app/withholdingcalculator/

It will ask you for all sorts of estimates & gives you a good sense of where you should end up for the year.

[FiguringItOut]

I recommending using the IRS's online Withholding Calculator: https://apps.irs.gov/app/withholdingcalculator/

It will ask you for all sorts of estimates & gives you a good sense of where you should end up for the year.

So much for the weekend project :)

Thank you for the link.  I just used it and it came up with this:

Based on the information you previously entered, your anticipated income tax for 2016 is $4,424. If you do not change your current withholding arrangement, you will have $5,912 withheld for 2016 resulting in an overpayment of $1,488 when you file your return. If you want your withholding to more closely match your anticipated tax, adjust your withholding on a new Form W-4 as follows:
For the only job you entered (which has a projected salary of $90,000): 7 allowances.
Check the “Single” box on your Form W-4

7 allowances for federal?  Really?  Seems excessive, no?

And I still need to figure out State and City. 

Do you think I can use my Federal projected AGI as a base for State and City and just figure out tax from tax tables? 

Edit: redid the form

[Drifterrider]

7 allowances for federal?  Really?  Seems excessive, no?

I'm single and I take 4 federal and 2 state.  I am very near break even every year.

[FiguringItOut]

7 allowances for federal?  Really?  Seems excessive, no?

I'm single and I take 4 federal and 2 state.  I am very near break even every year.

Do you max out pretax accounts?
I max out everything available to me, and I file Head of Household with 1 dependent.  I think just between standard deduction and extra exemption differences, I would need more allowances than that.

[Tremeroy]

One of the best parts about the IRS's tool—once you receive your first paycheck with adjusted allowances, you can plug in the updated information with your most recent pay stub. That should help you get comfort!

For my wife & myself, I like to check our withholdings once a quarter. It might be overkill, but I like to

For your state & local, how are taxes calculated? (i.e. are there graduated rates or major adjustments to federal AGI) Personally, I just use my state's calculator =)
http://www.dort.mo.gov/tax/calculators/withhold/

[Drifterrider]

7 allowances for federal?  Really?  Seems excessive, no?

I'm single and I take 4 federal and 2 state.  I am very near break even every year.

Do you max out pretax accounts?
I max out everything available to me, and I file Head of Household with 1 dependent.  I think just between standard deduction and extra exemption differences, I would need more allowances than that.

Yes, I max my 401K including the catch up. 

[Highbeam]

The w4 is an estimation for normal people. We are not normal. It's so bad you can almost just go to the end and tell them how much to withhold each year. My payroll lady actually ran paycheck samples for each withholding amount until I backed in to the desired amount.

[kanga1622]

I actually do something a bit bizarre on my W4. I tell them I have 20 deductions and then give a flat dollar amount that I want withheld from each paycheck. As I have a pretty good idea how much my overall tax bill will be for federal (and I live in a no state income tax state) this is a lot easier for me than trying to play with the deductions number until it matched.

Since my tax bill doesn't change much from one year to the next, I just divide the total tax owed in the previous year by the number of paychecks per year and enter that number on the form.

[MDM]

See also http://forum.mrmoneymustache.com/taxes/best-way-to-calculate-w-4-exemptions-for-2016/ for a variety of ways to approach this.