How to not get a refund check?

[blackjack]

How do I adjust my W-4 so I don't get a refund or I get a very small refund?

Im not sure what number to put in

these my options on what to change on my W-4
   
Im not sure what to put down for single or married;;; i am actually married now
   
Enter total number of Allowances you are claiming:
   

   
Enter Additional Amount, if any, you want withheld from each paycheck:
   
Indicate Marital Status:
   
Single
Married

[Eric222]

Here is an online calculator that will help you figure out what to put in to get as close to 0$ owed/refunded for taxes:
https://turbotax.intuit.com/tax-tools/calculators/w4/

[blackjack]

im a little confused, i finished the calculator. at the end it gave me these results
maybe i didn't do something correct...
Your refund amount
$9230
Current withholding per paycheck with 0 allowance(s): $409
With 0 allowance(s), your withholding would be - $409
Difference in your take-home pay on each paycheck: -$0

but i i put 10 in for Number of withholding allowances
i get these results

our refund amount
$8240
Current withholding per paycheck with 0 allowance(s): -$409
With 10 allowance(s), your withholding would be: -$211
Difference in your take-home pay on each paycheck: -$198

[Spork]

For me it was always an iterative process.  I always used the IRS formula for the first year.  When I'd pay or get a refund, I'd divide that by the number of paychecks and adjust accordingly.  I'd end up with a W4 that said something like "2 dependents plus $12 a paycheck".

You also have issues like tax laws changing, raises, one-time bonuses, etc...  It's never going to be perfect.  But over the years I generally would get it where I would either pay or refund an amount less than or equal to $200.  That was always close enough for me.


https://www.irs.gov/Individuals/IRS-Withholding-Calculator

[blackjack]

So according to that cal. I could put 10 in and still get a large refund back, correcT?

[teen persuasion]

Looking at your results, you seem to already have enough withheld to give you a large refund, and could claim a high enough number to have $0 for the rest of the year.  However, you will want to figure out the correct amount to have withheld from each paycheck starting in Jan 2016 when everything resets.

Try doing a dry run of your taxes based on what you've already earned + expected thru the end of the year, and compare it to what you have held withheld.  If married, use your combined numbers of course.

For next year, do you expect similar earnings?  If so, use the expected tax total (not refund/owed) and divide it up by payperiods to get a ballpark withholding number.  Then use the withholding calculator to help find the correct allowances.

It looks like you expect 5 more paychecks - is that weekly, or are you including a spouse's paychecks, too?

[James]

I used to do so much charitable giving, owned a large house, ran my own business, had a few kids etc, that I couldn't put a number high enough not to get a return. I don't think it is right that you can't cut back the withholding to match your expected taxes. But now that I do less charitable as I focus on getting to FI, I own a house less than half the value, and no longer run a business, I am no longer getting a check back. Each year I try and work it so I pay about $1000 in taxes when I file. If it is a bit larger that is fine, and if I get a small check that is fine. I just want it so my running checking account balance can pay the taxes as needed.


For those who have less predictable income I'm sure it is harder, but if your income is predictable you should be able to adjust your number each year and reach a point you are paying a bit in taxes when you file each year rather than getting a return. I always found the calculators to be difficult because of all the individual differences, so unless you fit the "standard", just coming up a with a number on your own might be best.

[blackjack]

This is confusing for me; sorry; maybe I should just start off putting down "5" on my W-4 and adjust from there? I don't mind getting a small refund back
Right now my wife stopped working this past April but will go back to work in april 2016; It's only my income alone...

this is as of right now; I get paid each friday
 FICA                   4,490.85
 FICA MEDICARE   1,050.28
  FEDERAL TAX    13,921.46
 ST TAX- PA          2,223.72
total gross:          72,433.04

[NaturallyHappier]

This might be more helpful.

http://www.vertex42.com/Calculators/paycheck-calculator.html

Realize that there is a lot that goes into your actual taxes, such as deductions, capital gain, dividend income, etc.  So to know what you are actually going to pay you need to actually calculate your annual taxes by estimating all those numbers and then crunching the numbers to determine your taxes.  The W4 is just trying to get you close.  That is why most people just see how much the get back or owe each year and adjust the following year.

The spreadsheet in the above link will at least let you see how much will be withheld based on how you fill out the W4.

[Eric]

Forget the W-4 number.  Just tell your employer how much you want withheld.  The actual amount of dollars per pay check.  The W-4 is just there for people who don't care about this stuff and where a reasonable estimate is fine.  If you want to be more exact, use the exact dollar amount.

[blackjack]

I can make all the adjustments online..

[blackjack]

I’ve always heard that you shouldn’t claim more than 9 on your W-4 or you may be audited.; is that true?

I guess ill start out putting like a 8 on the form and go from there..... im not sure what else to do

[teen persuasion]

DH has been claiming 14 for years, no audits.  We've got lots of nonrefundable credits, so needed to get his fed withholding to $0.  Unfortunately, we'd need to claim 25 on state to get that to $0, but the state frowns on greater than 15, so 14 it is.

[blackjack]

thanx for that = ]

[johnny847]

DH has been claiming 14 for years, no audits. We've got lots of nonrefundable credits, so needed to get his fed withholding to $0.  Unfortunately, we'd need to claim 25 on state to get that to $0, but the state frowns on greater than 15, so 14 it is.

I just want to make sure you understand how a nonrefundable credit works.

It is not required for you to get your tax withholding to zero to get all of your nonrefundable credits. A nonrefundable tax credit means you cannot push your tax liability to be negative. It does not mean you are not entitled to a refund if your tax withholding is too high.


By example:
A single man earning $47750 in 2015 will incur a tax liability of $922.5 when just claiming the standard deduction and exemption. Assume he qualifies for $1000 in nonrefundable tax credits.

First assume this person set up tax withholding to have nothing withheld.
When he files his taxes, he will have incurred a tax liability of $922.50 while qualifying for $1000 in nonrefundable tax credits. However, he is only entitled to claim $922.50 in nonrefundable tax credits. He does not receive a refund.

Now assume this person set up tax withholding to have $1000 withheld in 2015.
When he files his taxes, he will have incurred a tax liability of $922.50 while qualifying for $1000 in nonrefundable tax credits. The nonrefundable tax credits push his tax liability to zero, but no further. Furthermore, he had $1000 in taxes withheld in 2015, so he is sent a tax refund of $1000.


Make sense?

[TheAnonOne]

I find this a nearly impossible battle for me. I work hourly and am the primary income holder to the family.

Our income can vary pretty wildly depending on contracts consistency, rate, and overtime. For instance, last year we made $45,000 less than this year, only due to less overtime and a slightly lower rate.  I can flow between 160 and 220 yearly.

I simply cannot plan for that. The W2 change is also made by the owner of the company and I rather not bother him too much. For 2014 we had single and 0 each. For 2015 I changed it to Married and 1 each. I think last year I got 8k back, this year it's looking like 4k. That's decently close enough... (If you were making 40k and had a 4k refund, that would proportionally be a much bigger deal... 10% vs 2% or so..)

[teen persuasion]

DH has been claiming 14 for years, no audits. We've got lots of nonrefundable credits, so needed to get his fed withholding to $0.  Unfortunately, we'd need to claim 25 on state to get that to $0, but the state frowns on greater than 15, so 14 it is.

I just want to make sure you understand how a nonrefundable credit works.

It is not required for you to get your tax withholding to zero to get all of your nonrefundable credits. A nonrefundable tax credit means you cannot push your tax liability to be negative. It does not mean you are not entitled to a refund if your tax withholding is too high.


By example:
A single man earning $47750 in 2015 will incur a tax liability of $922.5 when just claiming the standard deduction and exemption. Assume he qualifies for $1000 in nonrefundable tax credits.

First assume this person set up tax withholding to have nothing withheld.
When he files his taxes, he will have incurred a tax liability of $922.50 while qualifying for $1000 in nonrefundable tax credits. However, he is only entitled to claim $922.50 in nonrefundable tax credits. He does not receive a refund.

Now assume this person set up tax withholding to have $1000 withheld in 2015.
When he files his taxes, he will have incurred a tax liability of $922.50 while qualifying for $1000 in nonrefundable tax credits. The nonrefundable tax credits push his tax liability to zero, but no further. Furthermore, he had $1000 in taxes withheld in 2015, so he is sent a tax refund of $1000.


Make sense?

Thanks Johnny - I obviously botched my explanation.

I misspoke - we've got lots of refundable and nonrefundable credits, and are basically at/near $0 taxable (so most/all of the refundable credits are worthless to us presently.  In the past we've gotten 5 figure refunds - I'm driving our withholdings as near to zero as possible since I see no need to have extra withheld with all the credits I do have to wait to get refunded to us (CTC x 5, EITC, state matches of both those, state volunteer FF credit for DH, AOC, state tuition credits...)

A few more years, and a few more of the kids over 17 and thru college and out of the house, we will be in an entirely different scenario.  Maybe then we will be able to take advantage of the retirement savers credit.  It's been great funding our Roth IRAs with the refunds, though.

[blackjack]

is this true? someone told me this
Not everyone who claims to be exempt on their w4 is actually exempt...they just don't want taxes withheld. At that point it's between them and the IRS, which is why a new form is required annually to cover "company". If someone repeatedly claims exempt or too many allowances, the IRS will eventually send in a letter to Payroll that locks in the w4 status the IRS believes is correct.

[johnny847]

Not everyone who claims to be exempt on their w4 is actually exempt...they just don't want taxes withheld.

Yes

At that point it's between them and the IRS,

Yes

which is why a new form is required annually to cover "company".

I'm not sure what you mean by this (in particular I am confused by the use of quotes). Do you mean the employer?

If someone repeatedly claims exempt or too many allowances, the IRS will eventually send in a letter to Payroll that locks in the w4 status the IRS believes is correct.

I don't know if this will always lead to the IRS doing so, but that is what I hear they reserve the right to do.

[MsPeacock]

For me it was always an iterative process.  I always used the IRS formula for the first year.  When I'd pay or get a refund, I'd divide that by the number of paychecks and adjust accordingly.  I'd end up with a W4 that said something like "2 dependents plus $12 a paycheck".

You also have issues like tax laws changing, raises, one-time bonuses, etc...  It's never going to be perfect.  But over the years I generally would get it where I would either pay or refund an amount less than or equal to $200.  That was always close enough for me.


https://www.irs.gov/Individuals/IRS-Withholding-Calculator

This is basically what I did. I figured out based on my past return, and the fiddled with the w4 a few times until it was in the ballpark. I think I owe $800 this year. Last year I got something like $7000 back. Nwould check each paycheck after I had adjusted the w4 and readjusted as needed.

I guess for a lot of people just putting a number of dependants or whatever is fine, but it tends to significantly overestimate the withholding. I would prefer to just out in amount and be done with it, but as I recall that wasn't an option.