The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: minority_finance_mo on January 29, 2015, 05:04:52 PM
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I'm starting a new job and am trying to accurately fill out a W4 form. I plan on maxing out my tIRA this year. Is there a way I can do that pre-tax dollars, or a way to indicate to the IRS that I plan to max out this benefit this year, so my taxes per paycheck are reduced?
Currently, as I understand it, I am contributing to my tIRA Vanguard account with post-tax dollars, and noting the contribution at tax-time in order to collect a refund on the taxes paid. As you know, however, this is money that I could have been putting to use during the year, rather than paying out to the government in the form of an interest-free loan.
Thoughts?
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You could change your federal withholding to reflect the tax you estimate you will owe.
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You could change your federal withholding to reflect the tax you estimate you will owe.
How would I do that? I see the "Additional amount, if any, you want withheld from each paycheck" column (line 6 on the 2015 form, page 2), but that seems like money you want withheld on top of the usual federal withholdings. Am I wrong?
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You could change your federal withholding to reflect the tax you estimate you will owe.
How would I do that? I see the "Additional amount, if any, you want withheld from each paycheck" column (line 6 on the 2015 form, page 2), but that seems like money you want withheld on top of the usual federal withholdings. Am I wrong?
Wait until you get your first check. Project out for the rest of the year and "do" your taxes. Ask your payroll people to adjust to the exact dollar amount you want withheld. The w-4 is just an estimate. You know, for regular people. If you're willing to do the work, you can have your withholding adjusted to the exact amount you want.
For example, my current job doesn't have a 401k, so after I got my first check, I had to have them add an extra $50/check to cover the shortage. You can do the opposite.
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You could change your federal withholding to reflect the tax you estimate you will owe.
How would I do that? I see the "Additional amount, if any, you want withheld from each paycheck" column (line 6 on the 2015 form, page 2), but that seems like money you want withheld on top of the usual federal withholdings. Am I wrong?
Wait until you get your first check. Project out for the rest of the year and "do" your taxes. Ask your payroll people to adjust to the exact dollar amount you want withheld. The w-4 is just an estimate. You know, for regular people. If you're willing to do the work, you can have your withholding adjusted to the exact amount you want.
For example, my current job doesn't have a 401k, so after I got my first check, I had to have them add an extra $50/check to cover the shortage. You can do the opposite.
Is that a common request? (AKA something the typical HR department/paycheck vendor is going to be able to handle?)
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The w-4 is just an estimate. You know, for regular people. If you're willing to do the work, you can have your withholding adjusted to the exact amount you want.
Precisely. If I enter the number of allowances that the short W4 questionnaire leads me to believe is correct, then I will owe way too much in tax, as I have two sources of income: W2 income, and fellowship income that has no tax withheld but is still subject to income tax. The fellowship income amounts to almost as much as my W2 income.
You can basically claim as many or as few allowances on your W4 as you would like. You just want to project your taxes and withholding to have a refund of $0 come next April.
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In my experience, they'll make any adjustments you want. I'm not sure if that makes it "common", only because no one does this sort of stuff but us. :) It should be a two second adjustment in the applicable payroll system. I'd be really surprised if it was a problem.
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I've had years where I updated my W4 at least four times in a single calendar year, with the intention of only having overpaid my taxes a small amount for state and federal. It's all done online with my company, so it basically happens automatically without having to talk to an HR person or anything. I used a paycheck simulator site to determine the tax impact of federal exemption values and where that would bring me to at the end of the year. There's some math involved, but if you're willing to invest the time to learn how to quickly calculate your tax exposure, it's not hard.
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You could change your federal withholding to reflect the tax you estimate you will owe.
How would I do that? I see the "Additional amount, if any, you want withheld from each paycheck" column (line 6 on the 2015 form, page 2), but that seems like money you want withheld on top of the usual federal withholdings. Am I wrong?
From your description it seems you will want a larger number of withholding allowances. Check http://www.irs.gov/Individuals/IRS-Withholding-Calculator - does that do what you want?
See http://forum.mrmoneymustache.com/ask-a-mustachian/taxes-exemption-questions/msg397577/#msg397577 for related comments.
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You could change your federal withholding to reflect the tax you estimate you will owe.
How would I do that? I see the "Additional amount, if any, you want withheld from each paycheck" column (line 6 on the 2015 form, page 2), but that seems like money you want withheld on top of the usual federal withholdings. Am I wrong?
From your description it seems you will want a larger number of withholding allowances. Check http://www.irs.gov/Individuals/IRS-Withholding-Calculator - does that do what you want?
See http://forum.mrmoneymustache.com/ask-a-mustachian/taxes-exemption-questions/msg397577/#msg397577 for related comments.
Thanks so much MDM, that was very helpful. I adjusted my allowances with the help of that calculator, and will double-check the withholding once my first paycheck comes in.
Thanks everyone, for the help!