W-4 & Tax Question

[GoudaBrew]

Pre-marriage, my W-4 tax marital status was "single" (obviously) and I claimed "0" federal allowances. I got married 5 weeks ago, changed my tax marital status on my W-4 to "married", but left a "0" for federal allowances. My wife did the same. We plan on filing jointly.

 

Anyway, we noticed that on both of our most recent earnings statements federal witholdings were reduced by about 30%. Is this just because married couples get some kind of tax reduction? I just don't want to owe money come tax time next year.

 

I know this is the type of question I should be asking the payroll department, but that answer could take weeks to get and I bet BF.net answers this for me in less than a day!

[whizkid]

Do you do your own taxes? Do you have a tax program from last year? The best way to figure this out is to do a tax return with your estimated combined income from all sources this year, figure out withholding so far and add in what the withholding would be if you kept it like it is now through the end of the year. Using last years tax tables, standard deductions etc. should be good enough to give you a good idea. Everyone's situation is different so the payroll department may not be able to help you much. Just make sure not to include the making work pay credit.

[GoudaBrew]

No, we have a tax preparer do our taxes, but I have all the paper work. I guess I'll have to pull last years paper work, find our itemized deductions (2011's should be similar), determine our projected taxable income, look up 2011 tax tables and see what we should be withholding. Agree? Thanks!

[whizkid]

Yeah, you could just leave it as it is and likely give the government a big no interest loan but if you're like me, I think it's worth a couple hours work to get the refund to be more reasonable and have the peace of mind that there isn't something weird going on and not enough is being withheld and you'll have a penalty. Subsequent years will be easier to understand and figure out.

[mothershipconnection]

Our employers apparently took care of it beautifully. In 2009, I think we each got about a hundred bucks back. Last year, they adjusted our withholding after we got married in July, we got a refund of $98.

[BrewersSuperCollector]

I know its not the financially correct thing to do, but I claim Single (1) and I'm Married (4). I get about between 11-12k back between state and federal. Its a forced savings for me as I would piss most of it away anyways. Bank interest rates are at 0.50% anyway.

[Weeks4MVP]

One other thing you could do is check the box on the W-4 to indicate "married, but withhold at higher single rate." Like whizkid said, it's pretty wise to run a rough estimate of what your total taxes will be to determine how much to withhold. You don't want to give the government a big interest free loan and you probably don't want to be stuck with a huge tax bill come April.

[Outlander]

I would say there is very little chance of you owing any money claiming married 0 unless you are making a lot of money in the stock market or have some other income you are not withholding on.

[GoudaBrew]

Weeks4MVP wrote:

---

One other thing you could do is check the box on the W-4 to indicate "married, but withhold at higher single rate." Like whizkid said, it's pretty wise to run a rough estimate of what your total taxes will be to determine how much to withhold. You don't want to give the government a big interest free loan and you probably don't want to be stuck with a huge tax bill come April.

I think that's what we'll end up doing. In the past we've gotten nice tax returns, but nothing so large that I've monkeyed with my withholdings before. I'd hate to owe money on tax day and with the significant decrease in our withholdings, it might be close. I still plan on running an estimate of our total taxes when time permits just to be sure. Thanks for all the advice.