Payroll tax help

[WapitiBob]

I’ve been having issues with my employer and their accountant. They keep telling me nothing is wrong. Most of 2023 I didn’t pay federal taxes. I ended up switching my W4 to single and zero to have some taxes withheld so I’m not in a bind.


Now for 2024 I’m Married with 2 exceptions and $0 is being withheld for federal taxes again.

I had only one day and the Holliday pay on this pay period and my gross was $343. No federal taxes withheld again. Previous story is I didn’t make enough per pay period. I think that is total BS based on what I’ve read on the IRS website.

Is there anyone familiar with payroll taxes? @Big Fin

I had the same issue when I was working and had to add a voluntary addl amount to be withheld. There's a line item for it on the withholding form.

 

[Addicting]

@npaden has it nailed. If you have a working spouse or significant outside income, don't just rely on the IRS tables. As he said, those tables assume the income to be considered is what your employer is paying you, and thus, calculates withholding based on that.

Many dual income couples end up under-withheld. Both indicate on their W-4 that they have three kids and are married. Thus two combined W-4s give the appearance of 6 kids, four spouses, and two standard deductions. If you have a dual income household, make sure you adjust your W-4 for additional withholding to avoid penalty at year-end.

Why when filing married filing jointly does it give you the full 29,200? Should it credit you with 1/2?

 

[Big Fin]

Why when filing married filing jointly does it give you the full 29,200? Should it credit you with 1/2?

Because that doesn’t solve whether a spouse is working. If a spouse was not working, it would be correct, as that couple would still file jointly.

 

[Addicting]

Because that doesn’t solve whether a spouse is working. If a spouse was not working, it would be correct, as that couple would still file jointly.

I am so glad I don’t live in the world of tax law.

To me, why would one file jointly if the spouse wasn’t working? To me married filing jointly means that they had an income that was reportable. 1/2 that credit amount should be applied to their income as it isn’t getting taxed at the right rate. Which is causing the W4 shenanigans we have to play to try and get close.

 

[Big Fin]

If you’re a one-income couple and you file “married and separate” you’re leaving a ton of tax benefits on the table.

 

[antelopedundee]

I'm no expert, but that doesn't sound even remotely correct.

Be especially careful because if you aren't paying taxes in throughout the year, the IRS will add penalties on top of what is owed to them. For example, small business owners have to pay in quarterly what they estimate their tax bill to be to avoid those penalties. Then at the end of the year you true up with the IRS

You need to have at least 90% of your tax obligation paid by 12/31 to avoid any penalty. Also you can pay the balance in full when you file if you file by 01/17 of the following year, but who can do that.

 

[antelopedundee]

I am so glad I don’t live in the world of tax law.

To me, why would one file jointly if the spouse wasn’t working? To me married filing jointly means that they had an income that was reportable. 1/2 that credit amount should be applied to their income as it isn’t getting taxed at the right rate. Which is causing the W4 shenanigans we have to play to try and get close.

Check the married filing jointly [EVEN IF ONLY 1 HAD INCOME] box.

Also, it's not difficult to use the previous years' info to estimate what your now 2024 income and resulting taxes MIGHT be or at least you can come pretty close. Fill out your withholding info appropriately.

 

[antelopedundee]

If you’re a one-income couple and you file “married and separate” you’re leaving a ton of tax benefits on the table.

Zackly, just take a gander at the various columns in the tax tables.

 

[antelopedundee]

Why when filing married filing jointly does it give you the full 29,200? Should it credit you with 1/2?

Those kinds of things are built into the withholding tables. One might have their wires crossed as you can claim fewer deductions/exemptions than you have, but you can't claim more. If both spouses are claiming the same deduction/s then one of them needs to change. It's common to underclaim in order to get a bigger refund. Not everyone agrees with that, but for the undisciplined it's a blessing to have a tidy sum available at that time of year.

 

[longbow51]

Who knew you could get so much free tax advice on a hunting site? Thanks to all.

 

[antelopedundee]

Who knew you could get so much free tax advice on a hunting site? Thanks to all.

Some should be taken with a grain of salt. Many post what they have actually gone through, but that doesn't guarantee that the IRS will accept the same thing a second time.

 

[brymoore]

Because that doesn’t solve whether a spouse is working. If a spouse was not working, it would be correct, as that couple would still file jointly.

Wife and I had this problem last year. She started a new job after being a stay at home mom raising our kids. I asked her twice if she was withdrawing enough money for taxes. Yes honey…. Tax time last year and she comes to me saying she made a huge mistake. Hmmm. She paid taxes at her income level. Ouch. She needed to pay at my income level, plus her additional income and a raise in my salary pushed us into the next tax bracket. Five digit check plus we got to pay a penalty!!

 

[Addicting]

Those kinds of things are built into the withholding tables. One might have their wires crossed as you can claim fewer deductions/exemptions than you have, but you can't claim more. If both spouses are claiming the same deduction/s then one of them needs to change. It's common to underclaim in order to get a bigger refund. Not everyone agrees with that, but for the undisciplined it's a blessing to have a tidy sum available at that time of year.

We had been doing the tidy some trick but now we are in a different bracket.

What I realized is we didn’t check that box on both W4. I was also claiming the kids and am now not the breadwinner in taxable income.

We ended up both having to redo our W4s to get it right for 2024. I think we will be ok with this year but should be in alot better shape next year.

 

[longbow51]

Some should be taken with a grain of salt. Many post what they have actually gone through, but that doesn't guarantee that the IRS will accept the same thing a second time.

I was referring to the real accountants. @Big Fin is a CPA

 

[SAJ-99]

Wife and I had this problem last year. She started a new job after being a stay at home mom raising our kids. I asked her twice if she was withdrawing enough money for taxes. Yes honey…. Tax time last year and she comes to me saying she made a huge mistake. Hmmm. She paid taxes at her income level. Ouch. She needed to pay at my income level, plus her additional income and a raise in my salary pushed us into the next tax bracket. Five digit check plus we got to pay a penalty!!

This. I will reiterate my personal conclusion to the problem, it has to be estimated by hand and an extra amount needs to be withheld. The more variable the income, the more "fun" you get to have in the process. I have found HR departments of even large companies to be useless in helping fill out the W4. If anyone wants it, I have a spreadsheet, LOL.

 

[antelopedundee]

I was referring to the real accountants. @Big Fin is a CPA

Yes, I know that.

 

[D_Walt]

@npaden has it nailed. If you have a working spouse or significant outside income, don't just rely on the IRS tables. As he said, those tables assume the income to be considered is what your employer is paying you, and thus, calculates withholding based on that.

Many dual income couples end up under-withheld. Both indicate on their W-4 that they have three kids and are married. Thus two combined W-4s give the appearance of 6 kids, four spouses, and two standard deductions. If you have a dual income household, make sure you adjust your W-4 for additional withholding to avoid penalty at year-end.

Definitely easy to wind up under-withheld as a married couple. My wife went back to work for the first time in 15 years in 2022…I thought I had discussed her W4 withholding but apparently not… Imagine my surprise when last January I realized she had made almost $70k and only about $1000 of federal income tax withheld. It was a real kick in the pants.

 

[BigHornRam]

Wife and I had this problem last year. She started a new job after being a stay at home mom raising our kids. I asked her twice if she was withdrawing enough money for taxes. Yes honey…. Tax time last year and she comes to me saying she made a huge mistake. Hmmm. She paid taxes at her income level. Ouch. She needed to pay at my income level, plus her additional income and a raise in my salary pushed us into the next tax bracket. Five digit check plus we got to pay a penalty!!

The US government thanks you and your wife for your generous support!

 

[brymoore]

The US government thanks you and your wife for your generous support!

My wife is an easy going woman until we start talking about the taxes we pay.

 

[D_Walt]

My wife is an easy going woman until we start talking about the taxes we pay.

Well, the good thing is if you’re paying federal income taxes then you’re making money through gainful employment and/or profitable investments.