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Davisdp
Level 1

Adjustment to W-4 now that my daughter is no longer a dependent

Hi. My daughter just finished college and is supporting herself and we no longer claim her as a dependent. As a result, we got walloped when it was time to pay our income tax (had to pay more than $3,600 - a big amount for us). I would like some advice on how I can fill out my W-4 so that we don't take a big hit next year. Any other advice along that line would be appreciated. My wife and I file jointly. She is a minister and the majority of her income comes in the form of a housing allowance.

2 Replies
OmM1
Employee Tax & Finance Expert

Adjustment to W-4 now that my daughter is no longer a dependent

Hello Davisdp,

Thank You for reaching out with your tax withholding question.

Since your wife is a minister and receives housing allowance, while the Housing Allowance for a Clergy is not taxable, you still have to pay Self Employment Taxes on it. You may want to make sure that either Self Employment Taxes a deposited by her Church. If the Church is unable to do this, you may want to have your employer take the self employment taxes out of your paycheck. To have your employer take out the Self Employment taxes from your paycheck you may use Extra Withholding on step 4(c) of your W4 form. Please first calculate total liability for the Self Employment Taxes for the year 2022 by multiplying the housing allowance amount by 15.3% and thendivide the amount by total number of paychecks that you are yet to receive and put the result in step 4(c).

Also please submit a revised W4 form with taking your daughter off as a dependent.

Hope this will avoid the tax time sticker shock and some interest and penalties.

 

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Davisdp
Level 1

Adjustment to W-4 now that my daughter is no longer a dependent

Thank you! this is very helpful!

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