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W4 Assistance
Erandus
Registered User regular
Registered User regular
W4's confuse the fuck out of me.
I'm fairly sure I've been doing mine retardedly. My wife and I are both claiming zero. Last year we got a decent federal return, but we found out this year that it's going to fuck up our state return and as it stands we are probably going to owe money to the state. Having discovered this, I was advised by our payroll department that "If you have a higher claimed deduction on your W4, you will get less back from federal but owe less to state". That sounds great. I grab a fresh new W4 form to actually follow their little arcane formula strictly and figure out my proper number of deductions.
The form tells me that not only should I claim zero, I should also have an extra 1500 dollars withheld annually to avoid owing federal taxes.
.... :?
We got several thousand dollars back from the fed last year by claiming 0 deductions. I know that I do not need to claim 0 and withhold an extra 1500 dollars. I need more of my federal money, and I need the state to get their hand out of my ass.
What do I do? I can provide some more detailed numbers if anyone who knows wtf they're talking about can lend me an assist, I'd just prefer to obviously not post income figures and dependent info right out in the open.
I'm fairly sure I've been doing mine retardedly. My wife and I are both claiming zero. Last year we got a decent federal return, but we found out this year that it's going to fuck up our state return and as it stands we are probably going to owe money to the state. Having discovered this, I was advised by our payroll department that "If you have a higher claimed deduction on your W4, you will get less back from federal but owe less to state". That sounds great. I grab a fresh new W4 form to actually follow their little arcane formula strictly and figure out my proper number of deductions.
The form tells me that not only should I claim zero, I should also have an extra 1500 dollars withheld annually to avoid owing federal taxes.
.... :?
We got several thousand dollars back from the fed last year by claiming 0 deductions. I know that I do not need to claim 0 and withhold an extra 1500 dollars. I need more of my federal money, and I need the state to get their hand out of my ass.
What do I do? I can provide some more detailed numbers if anyone who knows wtf they're talking about can lend me an assist, I'd just prefer to obviously not post income figures and dependent info right out in the open.
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This is really strange. What company(ies) are you working for? And how many jobs do you have? I assume you and your wife file "married, filing separately," and not "married, filing jointly?" I mean, if you're married, and have at least one dependent, with only one job, that's, like, three deductions right there.
Because of the overtime my wife works, her yearly income will be slightly under mine. My W2 says I can claim myself, each child once, and get a child tax credit for each child once, hence 5 deductions. On their "multiple jobs/two earners" worksheet of the w2, her income earns a "score" that is above 5. According to the worksheet, that means we should claim zero and withhold extra.
Thanks for at least peeking at the thread, to Thanatos and whomever else does. I'm getting off work now and taking the kids to the pool, so I'll be gone for the next 3-4 hours, but I will check up on this thread later tonight. This shit is frustrating me to death, and I really don't want to write the state another big check this year, even if it's sort of coming out of the federal return.
You can also get your hands on some software such as Turbo Tax or H&R Block's own and do the same thing. Both have, if I remember my research, a method to answer "what can I do better" questions.
Calling up one of the tax places can't hurt. Ask if they do offer the service and how much it would cost. The benefit is that you get experience professionals to whom you show actual information and let them explain to you the details and offer any suggestions on how to maximize your numbers (there are so many random and hidden deductions and discounts out there).
Murphy's Paradox: The more you plan, the more that can go wrong. The less you plan, the less likely your plan will succeed.
I guess, apparently, the issue is that our federal return is taxed by the state. So when we claim zero, we get a large federal return, but that ramps up our state tax to the point where we apparently owe. Then according to this worksheet, under the two earners/multiple jobs section, my wife's income on table 1 scores above what our deduction number is, so this worksheet tells us to claim zero and withhold extra on top of that. Which makes no sense whatsoever and sounds like it will exacerbate the hole we're digging in our state tax obligations.
This makes no sense at all to me. I'm thinking i may simply collect recent paystubs and the final paystub from my previous job so I have all my tax info for YTD, and find an H&R Block or local tax preparer, plunk down my paperwork and let them figure it out.
I grew up in Texas where we had no state tax, but I've lived in a state that does for the last 8 years and everytime I start a new job or want to change my withholdings at a current job I get the W4 and that what is basically the State's version of a W4.
The whole point of a W4 form and the worksheets is to get as close to what you are going to owe so that when tax time comes you don't owe anything extra and you don't get anything back.
I'm guessing what's happened with you is that because you ended up getting so much back from the Feds, that amount you got back was never taxed by the state (wasn't part of your taxable income because at the time it was considered owed to the federal gov., but it turns out you overpaid and got a refund). So now the state wants that added to your taxable income on your next state tax return.
You may have other deductions that aren't considered on the W4 worksheet that cause you to owe less and that could be throwing it off. If your household income hasn't increased and you have the same number of dependents, no change in whether you own a home or not, etc. AND you got a refund last year, then I would say one of you could increase your exemptions on your W4 if you wanted to (not up to 5 or anything but 1 or 2 maybe).
In the end you're still paying and owing the same amount of money, it just depends on whether you want to pay it out over the year or owe some come tax time.
If you take too many exemptions you'll just owe money come tax time, no harm done, BUT if you take too many and owe and then don't adjust it during the next year and owe again then I think you can be fined. You'd either fine yourself on your return or not worry about it unless your were audited.
On the W4 the withholding also change whether based on your martial filings status. I don't have many deductions and both my wife and I work at decent jobs so we claim 0 and single so it holds a bit more out. The next step would be for us to have extra withheld.
edit: If you're using some archaic paper form to figure out what to put then I suggest you hit up irs.gov and look for their withholding calculator. It is a bit more accurate than any worksheet if I remember correctly, because it factors in more information about your financial situation.
I know I need to increase my exemptions on my federal W4, but figuring out how much is the confusing part. Especially when I'm getting a fairly large return from them, but their forms are telling me I should be withholding even more. Strictly by the form, I have 5 deductions, but that Two Earners worksheet obliterates them.
http://www.irs.gov/individuals/article/0,,id=96196,00.html
Try that calculator
Holy crap that's got to be off. You must have got back quite of bit then? I just now saw that you said several thousand. I'll ask my wife what she thinks when we get off work if you want to wait until this evening.
She's a bit of an insider /cough
The way the two earners worksheet is supposed to work is that one spouse takes all the exemptions, and then the other spouse ends up claiming 0 and usually also having a little bit withheld. Which sounds like what happened with you. What's your wife claiming on her W-4 (or what does the worksheet tell you she should be claiming?)
Last year, claiming 0 with very similar income and the same number of dependents and marital status, and without the 1650 additional withholding, we received a federal return of right around 3k. Obviously continuing to claim 0 AND withholding as the worksheet suggests is asinine. I know for a fact I should be claiming some exemptions, but I have no idea how many, or how to figure that out, precisely. Every calculator I look at gives me a different number, from "zero plus withhold more" to "9 between yourself and your wife".
@rockmonkey: Would be most appreciated.
EDIT: You might want to start by checking your pay stub and making sure state taxes are being taken out.
You've already made the first correct step in contacting your HR department to find out if you filled out a State W-4 and didn't realize it.
This is where the problem should be coming. Your state taxes, the amount you will pay the state, has nothing to do with your federal return or refund. The state does get your federal return information and they use it to match up the state return you filed as a check system to make sure you have reported all of your income.
When filing your state return it is just like the federal return in that you report all your income. NOT your income minus your federal taxed withheld. SO the refund you get from federal should not be getting taxed. The refund should in no way affect what your state taxes comes out to be. IF you report your refund with all your yearly earnings you are basically paying taxes on the same money twice.
I hope that makes sense. If it doesn't and/or you would like more info you can PM rockmonkey more information and I can take a look at it. It would help to know what state you live in, I can look at the state return.