W-4 withholding with tuition

Forum|Forum|3 years ago
May 24, 2023
2 replies
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Last year I was told by my HR to submit a w-4 with exemption of federal taxes (very wrong of me to do). I was earning about 10k income with 22k tuition assistance from my employer that gets added to my taxes income at the end of the year.

My employer pays for the taxes on the tuition assistance at the end of the year but didn’t last year as I was tax exempt. I ended up owing too much federal taxes.

Now, I went back and submitted a new W-4 and unchecked the box about tax exemption so I can be taxed. However I am not getting federal taxes taken out at all until I get about 550 net pay and it would only take out about 5 dollars. This is obviously wrong and I need to fix it.

The issue is that my employer adds the tuition assistance which is estimated to be 20k for this year at the end of the year and pays taxes on it. I am not sure how much federal withholding I need as I am not actually earning about 2/3 of the taxed income as it would be paid for my school as tuition. How much should I withold, can I make it a percentage amount or is it a flat amount and it will take a huge amount before my employer adds the the tuition assistance money at the end?

sorry for any confusion I am still very new to paying taxes

Ask the Experts - W-4 - May 2023

AskTxBrenda

Level 4

I know the W-4 is confusing. You can submit another W-4 after you see what the correct amount is you want taken out. Use the calculator I provided below.

If you still need more taken out then -

Simply add an additional amount on Line 4(c) for "extra withholding." That will increase your income tax withholding, reduce the amount of your paycheck and either jack up your refund or reduce any amount of tax you owe when you file your tax return.

W-4 instructions -

By placing a “0” on line 5, you are indicating that you want the most amount of tax taken out of your pay each pay period. If you wish to claim 1 for yourself instead, then less tax is taken out of your pay each pay period.

If you have 2 or more jobs -

When filling out your W-4 forms, there are a few tips to keep in mind: For the job where you make the most money, claim all of the allowances you normally would on the W-4 form. For any other job that you have (your second job for example) claim zero.

If you want to owe the least amount when filing your taxes, you will claim 0 on the W-4, so the job will withhold at a higher rate. This is important especially if you have more than 1 job.

If you didn't account for each job across your W-4s, you may not have withheld enough, so your tax refund could be less than expected.

Calculator - https://apps.irs.gov/app/tax-withholding-estimator

Instructions - https://www.irs.gov/pub/irs-pdf/fw4.pdf

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Jawad-2002Author

Level 2

Even if I figure out the amount I need taken out, my pay isn’t exact every pay check as I work hourly and average about 12-21 hours every week. Also for the tuition assistance that gets added at the end of the year to my income. My employer adds about 20k and pays taxes on them. How do I make sure they pay the right amount if I ask for a flat withholding? If I write 0 on line 5 will that fix it? Or can I ask for a percentage to be taken out at all times?

Esther M

Level 4

Hi Jawad 2002,

I agree with that your tax situation is a bit complicated. It appears most of your income is the tuition assistance added to your income at the end of the year and you don't know the exact amount. Your best is to estimate or ask your employer how much tuition assistance you will be getting for the year and add it to your income and follow the steps in the below W-4 Calculator. Remember it's an estimate not the exact amount.

W-4 Calculator

I hope this answers your question

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Jawad-2002Author

Level 2

Hey Esther, if I do that, would it take a huge amount of my paychecks for the entire year? My employer will be paying about 20k plus my 10k income but the problem is they add and pay the 20k at the very end of the year so they pay about 5k in taxes all in one paycheck at the end and I am scared that I will be paying much of that taxes over the year rather than my employer paying it at the end

AskTxBrenda

Level 4

Zero will take out the highest withholding no matter what your pay is for the pay period, If you still think you need additional withheld, then, Simply add an additional amount on Line 4(c) for "extra withholding." That will increase your income tax withholding, reduce the amount of your paycheck and either jack up your refund or reduce any amount of tax you owe when you file your tax return.

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"