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posted May 29, 2024 2:42:08 PM

W-4 Extra Withholding

Hi

My wife and I were a bit surprised with the amount that we had to pay in taxes even after everything that was regularly deducted from our paychecks. I got a promotion close to the end of last year, so we anticipate even more for this year.

It seems we need to adjust our W-4s and fill out the Extra Withholding part, but how much?

How should I calculate the difference between the estimate total tax that we would owe and the total amount that is regularly deducted from each paycheck?

 

This is for 2023:

 

Adjusted Gross Income $ 144,809.00
Taxable Income. $ 117,109.00
Total Tax $ 16,379.00
Total Payments/Credits $ 10,098.00
Payment Due $ 6,281.00 
| Effective Tax Rate. 11.31%

0 3 5627
3 Replies
Employee Tax Expert
May 29, 2024 2:54:27 PM

You can use the W-4 calculator to generate updated W4's for you and your spouse:

Here is the link to the calculator: https://turbotax.intuit.com/tax-tools/calculators/w4/

 

Employee Tax Expert
May 29, 2024 3:15:58 PM

1. Gather ALL necessary information required:

  • Paystubs for ALL jobs (spouse too)
  • Other income info (side jobs, self-employment, investments, etc.)
  • Most Recent Tax Return. 

2. Please remember that UNDERPAYMENT OF ESTIMATED TAX PENALTIES can be avoided if:

  • You owe LESS THAN $1,000 after subtracting withholdings and credits, OR
  • If you paid the smaller of:
    -> AT LEAST 90% of the Tax for the CURRENT YEAR Tax Return, OR
    -> 100% of the Tax from the PRIOR YEAR Tax Return.

 3. Using your paystubs you can estimate if you you are going to owe any taxes and you make
      adjustments on your IRS Form W-4 accordingly. In addition, the IRS (and others) provide a
     calculator to perform these estimates.

About Form W-4, Employee's Withholding Certificate 
Tax Withholding Estimator 

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Employee Tax Expert
May 29, 2024 3:22:12 PM

Hi and good afternoon, Amr Ttx:

 

Yes, based on your situation and  your anticipation of higher earnings it would be an excellent idea to opt to  consider additional withholdings by submitting a new W-4, or maybe by making an additional estimated tax  payment.

The best way to calculate the amount in my opinion would be to use a tax withholding estimator calculator.  This will not only calculate where you are currently,  but where you will end up  if you continue, exactly as you are until the end of the year. I would also suggest using this type of tool to assist with your calculations, frequently, as you experience any sort of changes in earnings, credits or deductions.  

Once you have an idea of where you will end up, you can then take the difference between your current wthholdings, and actual estimated tax, and divide it by the number of pay cycles left in the year.  This will provide you with a rough estimate of the amount of additional withholdings you could request on your W-4.   

Please keep  that this is not an exact science but an estimate, and that there is no penalty for over payment of tax. 

Here are some links to additional information and tools:

 

Thank you for joining us today and have a great rest of your day!

Terri Lynn, EA

 

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