topic Re: How to change w4 to decrease federal withholding? in Deductions & credits

How to change w4 to decrease federal withholding?

MacTigger — Wed, 20 Jan 2021 16:18:21 GMT

How do I change my w4 to decrease federal withholding?

The form is all different from last year.

I need to owe at least $7500 at the end of the year, as I plan to take the federal EV car credit.

Thanks.

Re: How to change w4 to decrease federal withholding?

Irene2805 — Wed, 20 Jan 2021 16:57:40 GMT

You can prepare a new W-4 in TurboTax by following these steps:

Click Other Tax Situations.
In the Other Tax Forms section click the Start box next to Form W-4 and Estimated Taxes.
Continue through the screens, entering the requested information.
Print out the W-4 form and submit it to your employer.

Here are some tools to help you adjust your withholding:

Re: How to change w4 to decrease federal withholding?

MacTigger — Wed, 20 Jan 2021 19:34:11 GMT

Thanks.

I have already done the math.

I need 5k - less - to be withheld in federal taxes this year, to end up owing about $7500 for 2021.

Would I simply enter $5,000 on line 4(b) of my new W4, and submit to my company?

- Sorry, I found thatOther Tax Forms to be long and confusing.

Mac

Re: How to change w4 to decrease federal withholding?

KrisD15 — Wed, 20 Jan 2021 21:36:44 GMT

I think it will be helpful for you to understand that the credit is subtracted from your tax liability. It will not be affected by your withholding. Here's an example-

Lets say the tax on my income is 8,500 and I had no withholding. I also get the 7,500 Electric Vehicle Credit. The credit decreases my tax liability to 1,000. I owe 1,000. My tax for this year is 1,000 total.

Lets say the tax on my income is 8,500 and I had 10,000 withholding. I also get the 7,500 Electric Vehicle Credit. The credit brings my tax down to 1,000, I had 10,000 withheld, so I get a 9,000 refund. My tax for this year is 1,000.

NOW lets say my tax liability is only 5,000. The credit will only be worth up to 5,000 no matter how much withholding was done.

The credit won't change based on your withholding. It is subtracted from your tax liability. Your tax liability is calculated FIRST, then the credit is subtracted, then your remaining tax liability (if there is one) is subtracted from your withholding, then you get any excess withholding back.

Please click here for more TurboTax information

Re: How to change w4 to decrease federal withholding?

KrisD15 — Wed, 20 Jan 2021 23:49:15 GMT

I think it will be helpful for you to understand that the credit is subtracted from your tax liability. It will not be affected by your withholding. Here's an example-

NOW lets say my tax liability is only 5,000. The credit will only be worth up to 5,000 no matter how much withholding was done.

Please click here for more TurboTax information