W4 Withholdings

[Bucks893]

My employer does not automatically deduct federal taxes. I currently make about $72,000 a year. How much should I request to be withheld per paycheck on my W4?

Thank you!

[Terri Lynn]

The most accurate way to determine your withholding is to use a Tax Withholding Estimator:

• IRS Tax Withholding Estimator: This free online tool from the IRS is an excellent resource. It walks you through a series of questions about your income, deductions, and credits, and then provides a recommendation for how to fill out your Form W-4. You'll need your most recent pay stubs and your last year's tax return (if available).
  • Find it here: https://www.irs.gov/individuals/tax-withholding-estimator

General Considerations for a $72,000 Salary (for 2024 tax year, which you'll file in 2025):

Without knowing your filing status (Single, Married Filing Jointly, Head of Household) or other deductions/credits, it's impossible to give a precise dollar amount. However, here's a general idea of how federal income tax works for a $72,000 salary in 2024 (the tax year you are currently in):

• Tax Brackets are Progressive: This means you don't pay one flat percentage on your entire income. Different portions of your income are taxed at different rates.
• Standard Deduction: Most people take the standard deduction, which reduces your taxable income. For 2024, the standard deduction is:
  • Single: $14,600
  • Married Filing Jointly: $29,200
  • Head of Household: $21,900
• FICA Taxes (Social Security and Medicare): These are separate from federal income tax and are automatically deducted by most employers.
  • Social Security: 6.2% on income up to the annual limit ($168,600 for 2024).
  • Medicare: 1.45% on all earned income.

Example Calculation (for a Single Filer, without other deductions/credits):

Let's assume you are a Single Filer and take the standard deduction.

1. Gross Income: $72,000
2. Less Standard Deduction: $72,000 - $14,600 = $57,400 (This is your estimated taxable income)

Now, let's apply the 2024 tax brackets for a Single Filer to your taxable income of $57,400:

• 10% bracket: $0 to $11,600 taxed at 10% = $1,160
• 12% bracket: $11,601 to $47,150 (amount in this bracket: $47,150 - $11,600 = $35,550) taxed at 12% = $4,266
• 22% bracket: $47,151 to $100,525 (your remaining taxable income: $57,400 - $47,150 = $10,250) taxed at 22% = $2,255

Estimated Annual Federal Income Tax: $1,160 + $4,266 + $2,255 = $7,681

If you are paid bi-weekly (26 paychecks a year): $7,681 / 26 paychecks ≈ $295.42 per paycheck.

Important Notes:

• This is a simplified estimate. Your actual tax liability can vary significantly based on your specific situation (filing status, dependents, additional income, itemized deductions, tax credits, etc.).
• The IRS Tax Withholding Estimator is always the best tool because it accounts for all these factors.
• It's generally better to over-withhold a little than under-withhold, as under-withholding can lead to penalties. If you over-withhold, you'll simply receive a larger tax refund.
• Review your withholding annually or whenever you have a major life change (marriage, new child, new job, etc.).

Helpful links:

• Form W4 and your Take Home Pay TurboTax 
• What is a W4 Form? TurboTax 
• W4 Calculator TurboTax 
• IRS Withholding Estimator 

Please feel free to reach backout with any additional questions or concerns you might have!

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[Bucks893]

Thank you for this information!

[Emack_EA]

You make $72,000/year and you are single or head of household. please let me know if you are married, that changes everything. lastly you don't claim additional deduction or credits:

For $72,000

gross pay biweekly $2,789

Federal Tax $270-$350

Social Security (6.2%) $171.68

Medicare (1.45%) $40.15

If your mortgage interest + property taxes exceed the standard deduction, then you could request less tax withheld using Step 4(b) on the W-4 deductions

what you should do:

1-use the IRS Tax Estimator (https://www.irs.gov/individuals/tax-withholding-estimator)

2- without special deductions, aim for $275-$325 federal tax withholding per paycheck.

Please let me know if you like further clarification.

[Bucks893]

I am married, head of household and we claim our 2 children. 

[Bucks893]

I am married, head of household and we claim our 2 children. 

[Terri Lynn]

You can't be both "Married" and "Head of Household" for federal tax purposes. You would either file as Married Filing Jointly (which you've been doing), or if certain conditions are met (e.g., your spouse doesn't live in the home for the last 6 months of the year and you provide more than half the cost of keeping up a home for a qualifying child), you might qualify for Head of Household, but then you wouldn't be "Married Filing Jointly."

Assuming your primary filing status is Married Filing Jointly with your spouse, and you claim 2 children, here's how to approach your W-4:

1. Use the IRS Tax Withholding Estimator as soon as possible. This is critical with two working spouses and dependents. It will guide you through adding both your income and your spouse's income (even if your spouse works and has no tax withheld, that income still affects your joint tax liability), plus your children's information for potential tax credits.
• Find it here: https://www.irs.gov/individuals/tax-withholding-estimator
2. Adjust W-4s for Both Spouses. The estimator will provide specific recommendations for both your W-4 and your spouse's W-4. One common strategy for married couples where both work is to:
• Check the box in Step 2(c) on both W-4s. This tells each employer to withhold taxes at a higher "single" rate, which is often more accurate for combined incomes.
• Enter the total amount for dependent credits in Step 3 on one spouse's W-4 only. Do not split it between W-4s, and definitely not on both. For 2 children, the Child Tax Credit could be up to $2,000 per child, or $4,000 total (for 2024), but this is a credit that reduces your tax dollar-for-dollar, so it effectively means less tax needs to be withheld. The estimator will help you allocate this.
3. Consider Additional Withholding (Step 4c) as a Fine-Tune. After using the estimator and completing Steps 2 and 3, if the estimator still suggests a small under-withholding, or you want to ensure a refund, you can add an extra dollar amount in Step 4(c) on one of your W-4s.

Your previous advice about aiming for $275-$325 federal tax withholding per paycheck was based on a single filer. With a spouse and two children, your overall tax situation (standard deduction and potential credits) is vastly different.

You're right to clarify your filing status! Being married with dependents significantly impacts your tax situation compared to a single filer.

Here's how to approach the withholding for your specific situation (Married Filing Jointly, 2 dependents, $72,000 salary for your job, assuming your spouse also has income):

1.  Use the IRS Tax Withholding Estimator (Mandatory for Accuracy)

• Go to: https://www.irs.gov/individuals/tax-withholding-estimator
• Why: This tool is designed for situations exactly like yours (multiple incomes, dependents). It will account for:
• Both your incomes: It will factor in your $72,000 and your spouse's income.
• Married Filing Jointly standard deduction: For 2024, this is $29,200.
• Child Tax Credit: For two qualifying children, this is up to $2,000 per child, or $4,000 total for 2024. This credit directly reduces your tax liability.
• Any other income, deductions, or credits specific to your household.
• Outcome: The estimator will give you a precise recommendation on how to fill out both your W-4s (your employer's and your spouse's employer's) to ensure you withhold the correct amount and avoid owing a large sum or getting a huge refund.

2. General Calculation (for illustration, but use the estimator for exact figures):

Let's assume your $72,000 is your only income for the household, and you take the standard deduction and receive the full Child Tax Credit. This is an oversimplification, as your spouse's income would definitely affect this.

• Gross Income (your job): $72,000
• Standard Deduction (MFJ 2024): $29,200
• Estimated Taxable Income: $72,000 - $29,200 = $42,800
• Apply 2024 MFJ Tax Brackets to $42,800:
• 10% bracket: $0 to $23,200 = $2,320
• 12% bracket: $23,201 to $42,800 (remaining $19,599) = $2,351.88
• Subtotal Federal Income Tax: $2,320 + $2,351.88 = $4,671.88
• Subtract Child Tax Credit:
• $4,671.88 (estimated tax) - $4,000 (2 children x $2,000 CTC) = $671.88
• Estimated Annual Federal Income Tax After Credits (based on your income only:( Approximately $672
• Per Paycheck (Bi-weekly, 26 paychecks): $672 / 26 ≈ $25.85

**Important 

• This is extremely simplified. It does not account for your spouse's income, which will significantly increase your overall household taxable income and push you into higher tax brackets.
• It assumes full eligibility for the Child Tax Credit based on income thresholds (which are quite generous for MFJ).
• Withholding tables are complex. Employers use IRS-provided tables and your W-4 entries to determine actual withholding, which isn't a simple division of your estimated annual tax.

Helpful Links:

• IRS Tax Withholding Estimator 
• How To Estimate Your Federal Withholdings  
• Tax Calculator - Tax Refund & Return Estimator 2024-2025 

Please feel free to reach backout again with any additional questions or concerns you might have!

Thanks again! 

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**Mark the post that answers your question by clicking on "Mark as Best Answer.

[Bucks893]

I am very glad that you all hosted this open forum today. This information is truly helpful. Thank you so much!!!