This past year my wife and I both took new jobs and moved states. Throughout that process I must have filed my W-4 with my new company differently than my past employer, because this year I owed quite a bit and I had become accustomed to getting a refund rather than owing.
My question is simple - what do I need to put on my W-4 so that I do not owe again next year?
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Hi, @rbp015 ! TurboTax offers a free W-4 Calculator that you may find very helpful: https://turbotax.intuit.com/tax-tools/calculators/w4/
Also, keep in mind that you can enter any extra withholding amount you'd like on the form, under Step 4, (c). Is this helpful?
I went through the steps for the calculator and it showed that if I keep everything the same I can expect to pay $443 next year. Not sure I feel comfortable with that since I paid $4,000 this year.
This might be a situation where you may just want to add an extra amount on Step 4, item (c). For example, if you're paid 26 times per year, you might just want to ask for another $150 or so to be withheld per paycheck ($150 * 26 = $3,900). Worst case scenario is that you would get a large refund next year.
Ok, that makes sense. Is there any type of penalty to consider for the extra withholding?
Also, I will still have to fill out a revised W-4 form. Is this not a situation where I had filed "0" and now would want to file "1"? I am not seeing where that applies on the form but I am not an expert by any means in this arena.
The IRS can charge you an underpayment penalty if you do not have enough tax withheld throughout the year. They state:
"You may avoid the Underpayment of Estimated Tax by Individuals Penalty if:
I usually recommend filling out the W-4 "correctly". That is to say, by basing your calculations on the number of dependents you actually have. But if that is not producing the desired result, then I would recommend just requesting a specific dollar amount of additional withholding.
Ok. I think having an extra amount withheld should do the trick and at least give me a little buffer. Thanks for the help.
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