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How much federal income tax should be withheld on $20,700?

Her payroll records show married, claims no exemptions, paid once per month for 12 months, annual salary is $20,700.  What should her withholding for federal tax be on her monthly check?

I plugged my tax figures into TurboTax and it said I showed a refund of $1,711.
After I plugged in my wife's tax figures, we went to owing the government money.  It was hundreds of dollars!  This happened last year when we used turbotax too.  Is her employer not taking enough federal withholding out of her check?
  • You can see the IRS withholding amounts in this publication. Look at the table on p. 50: http://www.irs.gov/pub/irs-pdf/p15.pdf. If the withholding is not enough to keep you from owing taxes at year end, you need to have additional amounts withheld since 0 allowances apparently doesn't result in enough withholding.
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It just looks that way because you put them in as separate W2s and saw the tax due change in between them. If it all was on one W2 you would get the same answer. 

Because you only get one standard deduction and personal exemption (or 2 for Joint), no matter how many W2s you put in. Turbo Tax starts out by giving you the Standard Deduction.  You entered more income when you entered the second W2 but you didn't enter more deductions.  And each job only withheld taxes like it was your only job for the year.  You might want to adjust your withholding.  Also as you add more income you might not be getting as many credits as before like the EIC credit.

What you claim at work is different and doesn't need to match your tax return. Many people claim different exemptions on their paychecks to have more or less taken out for taxes.

To change your withholding at work you need to give your employer a new W4 form. You can ask him for one or Turbo Tax can help you fill it out. Go to
Federal Taxes Tab or Personal (for H&B version)
Other Tax Situations
Other Tax Forms
Form W-4 and Estimated Taxes - Click the Start or Update button

Here's the blank W-4 from the IRS….

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    The answer here is that the employer is likely taking exactly what they should take, based on her W4 form that she filled out with them.  Each individual job computes withholding based on the individual's income as matched to the federal withholding charts for the status & info they use on the W4 form for withholding.  However, because it is individually based, meaning each employer only considers what they are paying that employee during the year when compared to withholding charts, then withholding is done as if that will be the only taxable income for that person for the year.  The employer has no way of adding to their computations what might or might not be income for the year from another source.

    Instead, the employee has the option of having additional withholding done on their regular pay to account for the income in their household for the year.  Also, it isn't just your wife's withholding; it's withholding from both of your employers that will create a tax liability at the end of the year if the combined withholding does not account for the combined income on the joint return.

    If you were doing your taxes manually, totaling both W2 forms for you and your wife, entering that information directly into the 1040 form, and then going to the deductions section on the 1040 form to make deductions before calculating tax liability, you would not perceive one check or the other as "not withholding enough" if you owe money but that there wasn't enough combined between the two when compared to the tax tables.

    In Turbo Tax, you perceive it as such because the program front-end calculates ALL of the standard deduction and personal exemption deductions for both you, your wife, and any dependents on the return when you enter the first item of income.  The program does not have any additional deductions from income to include when the 2nd W2 form is entered and only calculates at that point the additional income and withholding as entered from the form.  If said deductions were "split" ahead of time when you entered your W2, you would not be seeing such a large number in the refund monitor on only your income.  However, the program cannot function in that manner because it must calculate all deductions from the beginning, just after the first income item is entered (the program does not "predict" that you might or might not be entering additional income into the program at that point & it would be way too complicated to do so).

    In short, the refund monitor is only a tool, not a reflection of whose W2 does or does not have enough withholding.  Yes, you should likely make adjustments to some W4 forms at work so that your withholding is enough to cover your entire household income and tax liability.  Whose W4 form you choose to use for that, whether one or both, is up to how you want to handle the taxes.
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