Tax Withholding For Novices
January 24, 2008 11:05 AM Subscribe
We're looking for a good online tax withholding calculator. Our 2008 income will be much higher than 2007, and we've only filed jointly once before (newlyweds).
Most online calculators assume your income is the same as last year, and some assume you understand how withholdings work in the first place. My wife just started a new job which pays 90% more than her last job (yay!) We don't have a lot of experience filing as a married couple- our 2008 return will be our third time filing jointly. We're getting a big refund this April, but with all this new income, we don't know how to fill out our W4s for 2008 so we come close to zero tax owed in April 2009.
Most online calculators assume your income is the same as last year, and some assume you understand how withholdings work in the first place. My wife just started a new job which pays 90% more than her last job (yay!) We don't have a lot of experience filing as a married couple- our 2008 return will be our third time filing jointly. We're getting a big refund this April, but with all this new income, we don't know how to fill out our W4s for 2008 so we come close to zero tax owed in April 2009.
If your income is going to be steady for a while, you could do this:
(1) Fill out your W-4s as you normally would, without doing any of the calculators. You should expect to owe a few hundred and budget for that.
(2) Do your taxes absolutely as soon as you can, so that you have a little time to scrape up whatever you owe.
(3) That amount you owe? Divide by 10 or 11, and then take that as additional withholding from someone's pay.
This probably violates some regulation somewhere and probably stands to give you a very small risk of paying some small penalty.
Or,
(4) Give your wife your tax information and send her to talk to the HR people. Help, I don't know how to fill these out!
posted by ROU_Xenophobe at 12:58 PM on January 24, 2008
(1) Fill out your W-4s as you normally would, without doing any of the calculators. You should expect to owe a few hundred and budget for that.
(2) Do your taxes absolutely as soon as you can, so that you have a little time to scrape up whatever you owe.
(3) That amount you owe? Divide by 10 or 11, and then take that as additional withholding from someone's pay.
This probably violates some regulation somewhere and probably stands to give you a very small risk of paying some small penalty.
Or,
(4) Give your wife your tax information and send her to talk to the HR people. Help, I don't know how to fill these out!
posted by ROU_Xenophobe at 12:58 PM on January 24, 2008
If it was me, I would just run the gross numbers. Get a 1040, fill in your expected incomes and find out how much tax you'll owe for 2008. Make sure your combined withholdings will cover that.
There are withholding tables that you can find on the irs website that show how withholding is calculated per withholding period, you look up your salary range for the period and then scan over to how many exemptions you claim.
posted by gjc at 1:02 PM on January 24, 2008
There are withholding tables that you can find on the irs website that show how withholding is calculated per withholding period, you look up your salary range for the period and then scan over to how many exemptions you claim.
posted by gjc at 1:02 PM on January 24, 2008
I've recommended paycheckcity.com to a lot of people for this purpose. The W-4 calculator will ask questions about both spouses income and will determine who should withhold what and create a form for you to take to employers.
You can also use their paycheck calculator to figure the taxes on individual paychecks. So after you decide what withholding amounts you want to use, you can plug in your salary and paycheck deductions to determine what your weekly paycheck will look like.
posted by saffry at 3:15 PM on January 24, 2008 [1 favorite]
You can also use their paycheck calculator to figure the taxes on individual paychecks. So after you decide what withholding amounts you want to use, you can plug in your salary and paycheck deductions to determine what your weekly paycheck will look like.
posted by saffry at 3:15 PM on January 24, 2008 [1 favorite]
The paycheckcity calculators a great - Use them all the time in a professional capacity and they are always correct.
posted by readery at 4:09 PM on January 24, 2008
posted by readery at 4:09 PM on January 24, 2008
If in 2007, your withholding covered 100% or more of the tax shown on your return, then you won't pay a penalty for not withholding enough. See IRS Publication 17 Pg 39.
posted by fengshui at 6:36 PM on January 24, 2008
posted by fengshui at 6:36 PM on January 24, 2008
Salary.com's salary wizard has a "paycheck" tab that allows you to manipulate your income and deductions to see what your actual payckeck amount will be after taxes, etc.
The IRS website also has a withholding calculator for a more annual perspective. I always get the max tax taken out of my checks until I meet my obligation and then tell my employer to not take out any more for the rest of the year.
posted by doppleradar at 1:24 PM on January 25, 2008
The IRS website also has a withholding calculator for a more annual perspective. I always get the max tax taken out of my checks until I meet my obligation and then tell my employer to not take out any more for the rest of the year.
posted by doppleradar at 1:24 PM on January 25, 2008
This thread is closed to new comments.
posted by Lord Kinbote at 11:15 AM on January 24, 2008