W4 - how much additional taxes to pay to avoid penalty for under payment

[Dbs61]

I filed jointly with my wife last year. For 7 months I was a contractor. I converted to full time 7/26/2022. I took 0 deductions on my W4 for both employers but didn't pay additional amount. My federal tax due was $5,209 which included a penalty for under payment. How do I determine additional amount to pay to avoid penalty? 

[ZeeEA20]

Hello @Dbs61 

To best determine if your W-4's are filled out correctly for you and your wife, you can use this W-4 Calculator  to ensure enough taxes are being withheld from your paychecks. 

If appears you were a contractor for 7 months in 2022 which would be most likely the cause of underpayment of your taxes if you didn't pay any estimated tax payments or had additional taxes withheld from your checks last year.

You can use our tax refund estimator to find out how much you'll get back this year (or how much you’ll owe) TaxCaster Tax Calculator   if your outcome is taxes owed, you can calculate additional withholding on your W-4 form on line 4c.  You can update your W-4 form any time during the year.

Hope this helps!

[Dbs61]

I was a W2 contractor, so I had a W4 and taxes were withheld. I've found those generic W4 calculators useless. Does your calculator help determine additional tax amount to pay each pay period?

[ZeeEA20]

@Dbs61   

Once you complete the W-4 calculator it will show you the results based on your input if you will have refund/balance due. You can make adjustments how much extra you would like to have withheld on line 4c per pay period to arrive at your desired result of not owing any taxes when you file your tax return. 

Another way to arrive at the additional tax amount to pay per pay period (if your 2023 tax situation is similar to last year), you can divide your tax liability (from 2022) by the amount of paychecks received which will give you a base number of your tax liability per pay period. When you review your current pay stubs, you can calculate the remaining pay periods how much more will be withheld. This can give you an insight if adjustments need to be made.