Author Topic: US Tax Withholding  (Read 3483 times)

jenstill

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US Tax Withholding
« on: May 26, 2013, 06:49:38 AM »
I've read in many posts where folks say things like "If you get a large tax refund each year, you're loaning your money to the government at 0% return. Change your withholdings so you don't do that." I realize this is probably a dumb question, but ... I do get a large tax refund each year; about $4k. I think to change the withholdings, I'd do some paperwork with my HR department. What I do not understand is what I need to change it to? I vaguely remember filling out a form -- W4 I think -- when I started working there 8 years ago, and it asked how many exceptions (or maybe exemptions?) I had. I think I put 4.

Here's my situation, as I assume that's how it's calculated. Single mom of 4 kids, one of whom is now 19 and in college; the others are under 18. I make $55K per year and own my home. Vermont does have an income tax as well. This past year with my raise, I found I no longer qualify for the Earned Income Tax Credit and won't going forward.

How should I change my tax paperwork so that I am not having too much taken out, but hopefully do not end up owing anything either? Thanks for your help!

MrSaturday

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Re: US Tax Withholding
« Reply #1 on: May 26, 2013, 03:07:42 PM »
The IRS witholding calculator will walk you through putting your income and tax information from a pay stub to get your form straight, and can tell you how much you'll end up owning or being owed if your income is steady.

warped

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Re: US Tax Withholding
« Reply #2 on: May 26, 2013, 04:06:52 PM »
Save paystubs.

Raise it by, say, 2.

See the difference.

Do the math, and get it down to a small, but positive, number.

Positive, because I don't like writing the checks, lol,

Joel

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Re: US Tax Withholding
« Reply #3 on: May 26, 2013, 07:14:05 PM »
Since your tax situation will be changing over the next few years, be careful with not withholding enough. Don't want to get stuck with a big tax bill at year end.

milla

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Re: US Tax Withholding
« Reply #4 on: May 27, 2013, 01:02:20 AM »
I run the withholding calculator quarterly because we have unpredictable income. It's great. I adjust as needed. I do not recommend anticipating future years' liability this year, that's kind of ridiculous. The tax code is ever-changing and so are jobs. Run the calculator right now, set it for this year and remember to run it again early next year because this is not a "set it and forget it" sort of thing.

jenstill

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Re: US Tax Withholding
« Reply #5 on: May 27, 2013, 09:17:52 AM »
Thanks everyone! I didn't know that calculator existed before, but just used it and am now set to adjust my W4 when I return to work tomorrow. Thanks again!