Good afternoon, my wife and I file jointly each year and owe thousands of dollars. We are trying to break even or owe a lot less, on our forms her wages are 92000$ and $10000 are federally withheld mine is $71000 of wages and 7500 fed tax held. We own a home with a mortgage, have 2 children in college. What should each of us withhold or adjust to be withheld? Thank you
Thank you for your question. I am happy to assist you.
The new form has three main sections that you have to complete to determine your withholding and you complete the section that applies to your situation. There are 4 steps for you to complete:
- Personal information
- Multiple jobs or spouse works
- Claim dependents
- Other adjustments
I believe the current amount of tax that has been withheld on both of your W2s ($7,500 and $10,000 respectively) is a little bit on the low side. Hence, you ended up owing taxes when you file your return every year.
I suggest that you and your spouse update your Form W4 and adjust the current federal tax withholding Additionally, you can have your employer withhold extra tax per pay period by completing Step 4C on the new Form W4.
In order to avoid paying taxes, you would have to have a higher federal tax withholding taken out of your paycheck so the total tax payments that you have made throughout the year will be higher than the taxes you owe, and you end up getting a refund.
Finding the right balance with the right amount of take home pay and not owing any taxes when you file your tax return can be a little bit tricky. It is a trial and error process. Please keep in mind that you can adjust your Form W4 as many times as necessary until you get the right balance.
You can also utilize the following Form W4 calculator to help you more accurately estimate how much withholding should be taken out of your paycheck:
Please let me know if this answer your questions, or if I can be of further assistance.
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