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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10149
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I have a similar question.
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.
Hi,.How can I help?
Customer: replied 1 year ago.
My wife works FT and earns ~$120k plus bonus of $10k. I am FT and earn ~$98k. My wife has 2 PT jobs and both earn her about $3k/yr each. We have 2 children under the age of 12. How do we fill out the W4 forms so that we do not owe at the end? We own a home as well.
Expert:  Lane replied 1 year ago.
Hi,.There are a couple of ways to go about this;.(1) complete the W-4 as the instructions indicate, indicating an additional allowance for each child and then adding one more to allow for the mortgage interest (art more than science but amazingly accurate)..(2) Let me estimate your taxes here, and then see how that compares to how your current withholding annualizes (what the withholding will end up being at the end of the year) and then add allowances for every 4000 (the personal exemption amount which is what a W-4 allowance equates to) of income that is being refunded.
Expert:  Lane replied 1 year ago.
Also, there's a withholding calulator in the IRS web site:.http://apps.irs.gov/app/withholdingcalculator/.I would start there ... takes your filing status into account, very accurate
Expert:  Lane replied 1 year ago.
As an example here's what you taxes look like (assuming a standard deduction) ... if you give me your mortgage interest property taxes and other itemized deductons I can be more accurate ... from a RAW tax owed perspective (NO WITHHOLDING ASSUMED) - other assumptions, married filing jointly - 2 dependants.Summary TableEstimated Tax AnalysisGross income$234,000Qualified plan contributions-$0Adjusted gross income=$234,000Standard/Itemized deductions-$12,600Personal exemptions-$16,000Taxable income=$205,400Tax liability before credits$44,564Child tax credits-$0Estimated tax liability=$44,564
Expert:  Lane replied 1 year ago.
When we divide that 44,564 by 4000 (a personal exemption for 2015) that tells is that AT THESE ASSUMPTIONS you should use 44564 / 4000 = 11.141 allowances between the two of you so depending on who you want to carry a higher burden in their paycheck
Customer: replied 1 year ago.
My current property taxes are ~$15k/yr. Mortgage interest ~$7k/yr. Children summer camp cost ~$2k.Capital loss $3k and our usual donation in all ~$1,500. We both contribute to 401k...me 5% and wife ~10%. Two boys under age of 12.
Expert:  Lane replied 1 year ago.
Allright ... give me a sec
Customer: replied 1 year ago.
FYI...By next year we are planning on buying a bigger house and the taxes will be ~$24k and mortgage interest for a full year ~$20k.
Expert:  Lane replied 1 year ago.
IIncome Tax Calculations New Jersey Federal Gross Income $234,000.00 $234,000.00Deductions for AGI ($16,300.00) ($16,300.00) <- Qualified plan contributionsAdjusted Gross Income (AGI) $217,700.00 $217,700.00Deductions and Personal ExemptionsItemized Deduction($0.00) ($23,500.00)Personal Exemptions (Four total ($0.00) ($15,800.00)Personal Exemptions (Two filer exemptions plus two dependants) ($5,000.00) ($0.00)Taxable Income $212,700.00 $178,400.00Federal Income Tax $37,199.00New Jersey Income Tax $9,509.99
Expert:  Lane replied 1 year ago.
Sorry but that didn't transfer well ... but took you down to 37199 federal so 37199 / 4000 = 9.29975Thats a small refund at 9 between the two of you
Customer: replied 1 year ago.
I am bit confused. I got the taxable income part and after that confused. So, how should we fill out the W4 forms? My wife as mentioned has her FT and 3 PT jobs (local yoga teaching) and I have a FT. Basically, how many allowances and should we fill Married for each one?
Expert:  Lane replied 1 year ago.
An allowance (the form tries to tie them to things like children and being married) is always equal to the year's personal exemption... for 2015 it's 4000..his return estimate has both of her 3000 pt jobs yor salary and her salary in it.but it also has deductions for AGI, your 401(k) contributions.so with all of that thrown in there you have a tax BILL for this jont return of 37199.That tells us that if (between the two of you - doesn't matter if you split or one of you takes more of the allowances) you can claim 9 and you'r right at break even
Expert:  Lane replied 1 year ago.
Just fill out the forms sitting next to each other and be suire that at the bottom the two TOTAL to 9
Expert:  Lane replied 1 year ago.
http://www.irs.gov/pub/irs-pdf/fw4.pdf
Expert:  Lane replied 1 year ago.
The worksheet at the top TRIES to do a good job of estimating but all that really matters is than on the slip itself (the W-4) you line 5 PLUS her line 5 = 9
Expert:  Lane replied 1 year ago.
Baed on THIS set of assumptions .... DO remember, however, that this would assume that you've been at nine (household total) for the FIRST half of the year

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