Author Topic: Am I withholding too much?  (Read 2238 times)

Easye418

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Am I withholding too much?
« on: August 06, 2015, 12:18:40 PM »
First of all,

Brand new to MMM.  Like other users, I have a lot to learn from you fine folks.

Here is the tax spreadsheet:

CategoryMonthly
Comments
Annual
Salary/Wages$5,837$70,040
Pretax Health Ins.$295$3,540
Pretax Vision/Dental Ins.$9$108
FICA base salary/wages$5,533$66,392
401(k) / 403(b) / TSP / etc.$850Room to increase?$10,200
Employer Match$148$1,770
Income subject to IRS tax$4,683$56,192
Other ordinary income$833$10,000
Federal Total Income$5,516$66,192
Federal tax$5432015 rates, MFJ, stand. ded., 1 exempt.$6,516
Soc. Sec.$343Assumes 1 earner paying$4,116
Medicare$80$963
Total income taxes$966$11,595
Income before other expenses  $4,550$54,597

This is just for myself.  My wife is 1099 employee makes $28/hr, works 32 hours a week, estimated quarterly taxes are $3,000 (had an accountant figure that out for me).

It is a little tricky for me because I bounced around this year.

My old job:  Jan- Mar 27th: $3,013.94 in Fed Taxes
My new job: Mar 28th- July 31st:  $4,731.81 in Fed Taxes

Part of those taxes include the taxes from the $10,000 sign on bonus.

I currently claim 2 on my W-4.

I would rather keep more money on my paycheck and have a $0 refund come tax season.

It seems if my salary remained constant (I hope it doesn't), I currently pay $245.01 a check or $5635.23 total fed taxes.  If I removed the $10k bonus, it seems I should pay $4,616 in Fed Taxes so I am overpaying by nearly $1,000 dollars or $43ish a check.

Any help would be greatly appreciated!


« Last Edit: August 06, 2015, 12:22:19 PM by Easye418 »

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Easye418

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Re: Am I withholding too much?
« Reply #2 on: August 06, 2015, 12:27:43 PM »

Gone Fishing

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Re: Am I withholding too much?
« Reply #3 on: August 06, 2015, 12:41:10 PM »
Sure, just a good way to double check yourself.  Just submit the proper form with more allowances if you want to adjust your withholding, nothing says you have to go with the recommended number of allowances.  I do it several times a year.  Just don't come up too short or you may owe penalties.  Managing to $0 is pretty cool (there was a thread on it a while back, not many can) but I figure if I am within a couple hundred, I did pretty well.

forummm

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Re: Am I withholding too much?
« Reply #4 on: August 06, 2015, 01:41:09 PM »
Over-withholding is OK. It's an interest free loan to the Treasury, but that's not the end of the world. And it's only $1k. You can just see how things end up at the end of the year and make an adjustment for next year.

MDM

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Re: Am I withholding too much?
« Reply #5 on: August 06, 2015, 01:43:14 PM »
https://turbotax.intuit.com/tax-tools/calculators/taxcaster/
Isn't tax caster doing the same thing that I just did above?
Likely yes.  Some people like to deal with web pages, some like spreadsheets.  Pick your favorite.

See http://forum.mrmoneymustache.com/taxes/best-paycheckwithholding-calculator(s)/ for more details.  In short:
"Taxcaster and the case study spreadsheet both have holes: taxcaster does not calculate the saver's credit, and may not handle passive income (from rentals) well.  The case study spreadsheet does not calculate the child/dependent care credit, nor any education credits, etc.  The spreadsheet does do the saver's, child tax, and earned income credits.

One also has the options of
  - using the previous year's full blown version of TaxAct, TurboTax, etc.
  - developing a personalized tax spreadsheet that covers one's own situation very well, even if it would not apply well to others.  E.g., see http://forum.mrmoneymustache.com/ask-a-mustachian/turbo-tax-vs-cpa/msg539186/#msg539186"

and

"Two related but different topics are being discussed.  There is
1) adjusting paycheck withholding to achieve a desired net tax due to the IRS (and state/local, as applicable) on April 15 of the next year, and
2) adjusting financial strategy (traditional vs. Roth, use HSA or not, etc.) to achieve maximum spendable income over time."

ETA: spreadsheet now does tax calculations for SS recipients
« Last Edit: November 02, 2015, 09:49:40 AM by MDM »

Easye418

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Re: Am I withholding too much?
« Reply #6 on: August 06, 2015, 01:48:01 PM »
Over-withholding is OK. It's an interest free loan to the Treasury, but that's not the end of the world. And it's only $1k. You can just see how things end up at the end of the year and make an adjustment for next year.

Cheers

https://turbotax.intuit.com/tax-tools/calculators/taxcaster/
Isn't tax caster doing the same thing that I just did above?
Likely yes.  Some people like to deal with web pages, some like spreadsheets.  Pick your favorite.

See http://forum.mrmoneymustache.com/taxes/best-paycheckwithholding-calculator(s)/ for more details.  In short:
"Taxcaster and the case study spreadsheet both have holes: taxcaster does not calculate the saver's credit, and may not handle passive income (from rentals) well.  The case study spreadsheet does not calculate the child/dependent care credit, nor any education credits, nor SS benefit taxation (probably not a big hole for the MMM audience), etc.  The spreadsheet does do the saver's, child tax, and earned income credits.

One also has the options of
  - using the previous year's full blown version of TaxAct, TurboTax, etc.
  - developing a personalized tax spreadsheet that covers one's own situation very well, even if it would not apply well to others.  E.g., see http://forum.mrmoneymustache.com/ask-a-mustachian/turbo-tax-vs-cpa/msg539186/#msg539186"

and

"Two related but different topics are being discussed.  There is
1) adjusting paycheck withholding to achieve a desired net tax due to the IRS (and state/local, as applicable) on April 15 of the next year, and
2) adjusting financial strategy (traditional vs. Roth, use HSA or not, etc.) to achieve maximum spendable income over time."



Excellent spreadsheet.  Great Excel work.