How come we will owe?

[Deleted]

I was playing with the w4 calculator using our recent paystubs and it is stating that we will end up owing.

I don't get it. Our filing status is Married with 0 exemptions for both state and federal.

We do zero exemptions just to cover that possibility of owing yet when I enter the amounts on the IRS withholding calculator it is saying that we will owe money.

www.irs.gov/individuals/page/0,,id=14806,00.html

[illinicheme]

DINKs frequently need to have additional tax withheld throughout the year. The standard withholding rates assume that there is a stay-at-home spouse. There is a worksheet with the W4 that helps you calculate the amount.

[Savoir Faire-Demogague in NJ]

We do zero exemptions just to cover that possibility of owing yet when I enter the amounts on the IRS withholding calculator it is saying that we will owe money.

This is a useles and pointless question unless you also tell us how much you owe.

[Angel!]

You are looking at the 2011 withholding calculator. Are you looking at a recent paystub & have your companies adjusted your withholdings to account for the making work pay credit expiring?

Also make sure that you are only entering taxable wages in the total wages box - meaning you may have to subtract out any insurance deductions taken out of your check or anything else that is taken out pre-tax that isn't included in their worksheet.

[boosmom]

I thought folks can do negative exemptions (-1, -2, etc.) if they need to?

[jeffreymo]

Feb 11, 2011 12:48:56 GMT -5 @illinicheme said:

DINKs frequently need to have additional tax withheld throughout the year. The standard withholding rates assume that there is a stay-at-home spouse. There is a worksheet with the W4 that helps you calculate the amount.

This is correct. Payroll systems have no way of telling if the other spouse works or how much the other spouse makes, which is why you have to manipulate the exemption number or use the additional amount box of the W-4 in your case since you're already at 0 exemptions.

And I just remembered that you are able to check the box that says "Married, but withhold at higher single rate" on the W-4 which is another option for increasing your withholding.

[illinicheme]

Feb 11, 2011 13:22:13 GMT -5 jeffreymo said:

And I just remembered that you are able to check the box that says "Married, but withhold at higher single rate" on the W-4 which is another option for increasing your withholding.

You know you've really made it when you check that box and STILL need to have more withheld! ;D

[bugeater2919]

We have the same issue, claiming 0 even though we have a dependent. I suppose we could have additional tax withheld but I just budget knowing we are going to have to pay in April. This year we owe $2650.

[reader79]

It's because the gubmint hates us!

My state refund is only $63, I know that I should be happy that I didn't loan them more. But last year I got back ~$200, so even at 0, am I going to have to pay in next year?

[telephus44]

Use the worksheet with the W-4 and figure out how much extra you need to have withheld. The closer your incomes are, the more you need to have withheld. Rather than guess what married 1 or married zero will do, I just do married 2 plus the extra, and I figured the extra based on that worksheet.

[phil5185]

just to cover that possibility of owing

LOL - so your goal is to join the average american who likes to overpay all year so that he can get $3000 of his own money returned to him the following April? (The average fed refund for 2010 is $3004).

[runewell]

I have the opposite problem, my federal exemptions are maxed out and I still get money back.

[Deleted]

Feb 11, 2011 12:52:41 GMT -5 Savoir Faire-Demogague in NJ said:

We do zero exemptions just to cover that possibility of owing yet when I enter the amounts on the IRS withholding calculator it is saying that we will owe money.

This is a useles and pointless question unless you also tell us how much you owe.

Sorry, was about to post all of that and got busy with work.
I am going to post it now.

[Deleted]

Feb 11, 2011 15:46:18 GMT -5 phil5185 said:

just to cover that possibility of owing

LOL - so your goal is to join the average american who likes to overpay all year so that he can get $3000 of his own money returned to him the following April? (The average fed refund for 2010 is $3004).

My goal is to get as close to zero as possible.

[Deleted]

Ok, it asked me for the following Information:

Married filling jointly.

Me
Salary : 53,000
401K Contributions : 10,600
Pay frequency: Weekly
Federal Taxes paid as of today: 494
Federal Taxes paid in last paycheck: 80

My wife
Salary : 42,000
401K Contributions : 8,400
Pay frequency: Every 2 weeks
Federal Taxes paid as of today: 308
Federal Taxes paid in last paycheck: 119

And the answer was:

Based on your responses, your anticipated income tax for 2011 is $7,704. If you do not change your current withholding arrangement, you will have $7,219 withheld for 2011, leaving $485 due when you file your return. To meet your anticipated tax of $7,704, change your current withholding arrangement by claiming 0 allowances plus an additional amount of $418 for the balance of 2011. Here’s how:

You and your spouse should each enter 0 on line 5 of all of your Forms W-4.
Have $418 withheld over the balance of this year. You may split this amount between your jobs any way you choose, entering on Line 6 of each Form W-4 the additional amount to withhold per paycheck for that job. If you want to spread the additional withholding in proportion to what would otherwise be withheld, then enter the following amounts for the job shown:
Job 1 (which has a projected salary of $42,000): $7 per paycheck.
Job 2 (which has a projected salary of $53,000): $5 per paycheck.

Check the “Married” box on your Form W-4.
Assuming this recommendation is in effect for the rest of 2011, your withholding will approximately equal your anticipated tax, and any refund or balance due should be less than $25.

But doing the day I thought about it: we qualified for the full $2,500 student loan interest in 2010 and will probably qualify for it in 2011 (which is why we got a refund this year + work pay credit of $800)...

So what do I do if I don't want a refund like this year (close to 2K for feds, and about 600 or so for state) since going by the IRS.gov it is saying we will owe money.

[schildi]

Feb 11, 2011 15:46:18 GMT -5 phil5185 said:

just to cover that possibility of owing

LOL - so your goal is to join the average american who likes to overpay all year so that he can get $3000 of his own money returned to him the following April? (The average fed refund for 2010 is $3004).

Phil, how would anybody know that yet?

[formerexpat]

I have the opposite problem, my federal exemptions are maxed out and I still get money back.

There is no such thing as your exemptions being maxed out. I claim 50 for fed and state and instead put in a flat amount to be withheld for fed and state so that I owe a minimal amount when I complete my taxes.

Me
Salary : 53,000
401K Contributions : 10,600
Pay frequency: Weekly
Federal Taxes paid as of today: 494
Federal Taxes paid in last paycheck: 80

My wife
Salary : 42,000
401K Contributions : 8,400
Pay frequency: Every 2 weeks
Federal Taxes paid as of today: 308
Federal Taxes paid in last paycheck: 119

www.obliviousinvestor.com/2011-tax-brackets/

gross: $95k
401k: ($19k)
medical?
student loan interest?
std ded: ($11.6k)
exemption ($7.4k)
federal taxable: $57k [minus any health care contributions & student loan interest up to $2.5k, which are tax deductible]

Fed tax owed on $57k for MFJ = $7.7k

you - $80 x 52 = $4,160
her - $119 x 26 = $3,094
total = $7,254

Complete the above with the appropriate figures for student loan interest and health care premiums paid to get an adjusted "federal taxable income". This will give you a pretty good estimate of federal taxes owed. Adjust your W4 on the line "additional to withhold" and add the difference so there is minimal difference when you do your 2011 tax return.

I'd recommend you learn more about the tax code and how to manage your taxes. It can help you make financially beneficial decisions for you and your family in future years.

Here are the instructions for the 1040: www.irs.gov/pub/irs-pdf/i1040.pdf

They're not complicated to understand and complete yourself. You should give it a try for your 2010 taxes if you already haven't had them completed. Do them yourself. [/size]

[TheOtherMe]

Excellent advice. At this point, you don't have anything complicated in your tax situation.