what to claim on w4

[a_nicolet0201]

what is best to claim on a w4 if you're in a top combined federal tax bracket and want to make sure enough is taken out throughout the year so the year-end tax payment is not so high

[SwapnaM]

When you and your spouse are in a top combined federal tax bracket and want to avoid a large year-end payment, the best approach is to ensure that enough tax is withheld from each of your paychecks to account for your combined income.

The key to this for high-income, two-earner households is to accurately use the IRS Tax Withholding Estimator and pay close attention to Step 2 (Multiple Jobs or Spouse Works) and Step 4(c) (Extra Withholding) on the Form W-4.

1. Use the IRS Tax Withholding Estimator:

   • This tool helps you determine the precise amount to withhold based on your combined income, filing status, and other factors. It’s especially useful for high-income earners. https://www.irs.gov/individuals/tax-withholding-estimator 
2. Account for Multiple Jobs: Complete this step if you (1) hold more than one job at a time, or (2) are married and plan to file a joint return and your spouse also works.

•    If you or your spouse have another job, complete Steps 3 through 4(b) on only one Form W-4. 
•    Your withholding will be most accurate if you do this on the Form W-4 for the highest paying job.

  3. Specify Additional Withholding: 

  • Line 4(c): This is a powerful tool for high-income earners. Enter an additional amount to be withheld from each paycheck on line 4(c). The IRS estimator will calculate the precise adjustment needed to account for your combined income and will often instruct one or both of you to enter an "extra withholding" amount in Step 4(c) to cover the higher marginal tax rates on your combined income.

            Please see, https://turbotax.intuit.com/tax-tips/irs-tax-forms/how-to-estimate-federal-  withholding/L99CO0yTK for more info about W4.

@a_nicolet0201 Thanks for the question!!