I want to decrease the tax withholding for only one check. What is an approximate amount to put on line 4b on my W4 to accomplish this? How is withholding calculated?

[rjs]

It's not that simple. The IRS has a 68 -page book for employers on how to calculate withholding.

Publication 15-T, Federal Income Tax Withholding Methods

Also, an employer can take up to 30 days to put a new W-4 into effect. So you'd better check with your employer and make sure you are going to be able to do what you want.

Why do you want to reduce your withholding for only one paycheck? What are you trying to accomplish? Maybe there's an easier way to do it.

[cahmay14]

It’s a new job with a large sign on bonus paying out in the first paycheck. I would like to not have a lot of it withheld for taxes. The old W4 forms we could change the number of exemptions to accomplish this.

[rjs · Accepted solution]

The bonus is considered "supplemental wages." There are special rules for withholding on supplemental wages. Those rules are in a different IRS publication, Publication 15, (Circular E), Employer's Tax Guide, Chapter 7. Basically the employer has the option of withholding a flat 22% on the bonus instead of treating it as if you made that much every pay period. Would that solve your problem? You are going to have to pay tax on the bonus, so you would want to have some tax withheld from it. It's the employer's choice to use that method, not your choice, so talk to the payroll department. Maybe that's what they're going to do.

If you've already started the job, it might be too late to change your W-4 for the first paycheck, and it might be too late to get them to use the 22% method if they were not already planning to do that.

[NCperson]

@cahmay14 - the other option is let the two paychecks settle in, see how much was withheld for that bonus and then beginning with the 3rd paycheck, adjust the withholdings for the rest of the year.   if your analysis is that you are going to be due a large refund comes April 15, this method 'drips in' the lower withholdings each pay period so the refund comes next April 15 is rather small.  Or alternatively, go the other way if you believe you are underwithheld.

But if the employer does the 22% withholding and your tax bracket is close to that then it could be a wash. 

[cahmay14]

Thank you for the information, I will look into this!

[cahmay14]

Thanks for pointing out this out, might be good option!