The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: EliteZags on September 27, 2019, 11:50:21 AM
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in short I got to take a nice break from work all year and just started again this month, estimate will earn something close to 45-50K this year and want to avoid overpaying on taxes and having a big refund
payroll doesn't have a way to alter federal tax withholding percentage, so I figured increasing # of allowances was the only way to reduce it, 1st paycheck I entered 5 allowances and ended up with 29% in taxes (Fed/CA state), 2nd one I increased to 10 and it lowered to 26%. Should I go even higher on the allowances to minimize witholding/refund?
Not going to contribute to 401K til Jan since there's no match yet and really no 2019 tax advantage for me since I will be in the 12% federal bracket after the 12K standard deduction right? planning to max HSA/Roth
just trying to figure out what withholding percentage I should be shooting for here so I'm not over/underpaying
here are the percentages from latest check with 10 allowances:
Fed Withholding- 10%
Fed MED/OASDI 7.5%
CA Withholding/OASD- 8.3%
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The IRS has a nice calculator (https://apps.irs.gov/app/tax-withholding-estimator) for that.
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The Medicare/SDI portion is fixed. Changing your allowances won't make a difference there. The federal percentage already seems in the right general ballpark if you're making $50k this year. If you're single that would probably put you right around the border between the 12% and 22% brackets, so 10% effective rate sounds about right. Not sure about your state taxes.