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Hello asking questions,
The 2010 tax tables have not yet been published, however, they are expected to be extremely close to the 2009 figures, so I will have to base my answer on the 2009 information which is availalble.
It sounds as though your total taxable income from your job and interest will be $102,300 for the year. The standard deduction for a married couple will be $11,400 and then you will be allowed personal exemptions of $3,650 each for you and your wife. This will bring your actual taxable income down to $83,600 for the year. Your federal tax on that amount will be $13,275.
On your W-4 form, if you fill it out as married with 2 allowances, they will withhold a total of $13,000 from your checks, and at the end of the year you would owe around $275 additional tax to be submitted with your return.
You may also request on line #6 of the W-4 form to have additional taxes withheld from each check in a certain amount. So if you would prefer to take care of that $275 throughout the year, then simply divide the $275 by the number of paychecks you receive each year, and enter that amount on line #6 of the W-4 form. This should then withhold just about exactly what you can expect to owe for the year.
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Thank you asking questions.
As your gross income is about $102,300
your standard deduction (MFJ) $11400
personal exemptions $7300 (for two persons)
taxable income $83,600
regular tax $13,275
making work pay credit - $800
and your estimated total tax liability is $12,475
So far the estimation above is correct.
What might affect your tax liability? Besides items you mentioned above - that might be health insurance premiums which are not included into your taxable income.
Also - estimations are made for 2009 - your 2010 tax liability (and withholding) might be a little less.
As you want to adjust your withholding to be a little less than your tax liability.
By filing W4 form as married - you will include deductions for your spouse. The more allowanced you will claim - less withholding will be from each paycheck. For $100,000 wages - if you file married with
-- zero allowances - your estimated federal income tax withholding would be $14,638
-- one allowance - your estimated federal income tax withholding would be $13,725
-- two allowances - your estimated federal income tax withholding would be $12,813
-- three allowances - your estimated federal income tax withholding would be $11,900
So far filing married with three allowances will match your objective. You need to be sure that you will owe not more than $1000 at the tax time to avoid possible underpayment penalty.
Let me know if you need any help.
Thank you for your response.
When I run the "Life Events Advisor" at TurboTax (http://turbotax.intuit.com/tax-tools/)
for $100,000 and choose Marriage, it says I will save up to $6,816 (vs single).
Is that accurate? Will 3 allowances put that into my paychecks throughout the year?
Thank you again,
If you were single with the same income level $102,300 for the year - your total tax liability for 2009 would be $19,746
Compare with above liability estimation for filing jointly with your spouse $12,475
You see - the difference is close to estimations by TurboTax.
We need to differentiate tax liability and withholding.
if you file W4 form as married with three allowances - your estimated federal income tax withholding would be $11,900
Ok... I think we're almost done...
So with W4 as Married 3 Allowances, should I expect an extra $262 per bi-weekly pay-check? Taking TurboTax's $6,816 estimate and dividing it by 26 gives you $262.
Will I owe at tax-time or will I still be getting a small refund?
I'd rather owe them than have them owe me.
I believe that TurboTax estimates tax liability and not withholding.
According to my estimations $19,746 - $12,475 = $7,271 - the difference is about $400 - so my wild guess is that TurboTax doesn't include making work pay credit.
based on My estimations - if you file W4 form as married with three allowances - your estimated federal income tax withholding would be $11,900 - and you will owe ~575 at the tax time.
If you prefer to have a small refund - use two allowances on the W4 - your estimated federal income tax withholding would be $12,813 - you your estimated refund will be ~$340.
Please be aware that withholding is estimated based to equal payments. If you will be paid bonuses or not equal payments - your withholding might differ.
"extra $262 in each bi-weekly paycheck" - should be in compare with something.
If you file W4 form as single with zero allowances as you states at the beginning - your estimated withholding with $100,000 pay would be $21,146
compare with filing W4 form as married with three allowances - your estimated federal income tax withholding would be $11,900
so the annual difference $9246 - assuming 26 pay periods - $355 less withholding with each paycheck.